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SCHEDULE 13E-4
_________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934)
_________________
ASTEC INDUSTRIES, INC.
(Name of Issuer and Person Filing Statement)
COMMON STOCK, PAR VALUE $0.20 PER SHARE
(Title of Class of Securities)
046224 101
(CUSIP Number of Class of Securities)
_________________
RICHARD W. BETHEA, JR., ESQ.
VICE PRESIDENT AND
CORPORATE COUNSEL
ASTEC INDUSTRIES, INC.
4101 JEROME AVENUE
CHATTANOOGA, TENNESSEE 37407
(423) 867-4210
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person Filing Statement)
_________________
COPY TO:
R. GREGORY BROPHY, ESQ.
ALSTON & BIRD LLP
1201 WEST PEACHTREE STREET, N.W., SUITE 4200
ATLANTA, GEORGIA 30309-3424
(404) 881-7000
_________________
MARCH 27, 1997
(DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDERS)
_________________
CALCULATION OF FILING FEE
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Transaction Valuation $21,000,000* Amount of Filing Fee $4,200
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*Based upon purchase of 2,000,000 shares at the maximum tender offer price of
$10.50 per share.
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/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously
paid.
Identify the previous filing by registration statement number, or the
form or schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
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ITEM 1. SECURITY AND ISSUER.
(a) The name of the Issuer is Astec Industries, Inc., a Tennessee
corporation (the "Company"), which has its principal executive offices at 4101
Jerome Avenue, Chattanooga, Tennessee, 37407.
(b) This Schedule 13E-4 relates to the offer by the Company to purchase
2,000,000 shares (or such lesser number of shares as are properly tendered and
not withdrawn) of its Common Stock, par value of $0.20 per share (the "Shares"
or the "Common Stock") (including the associated preferred stock purchase rights
(the "Rights") issued pursuant to the Shareholder Protection Rights Agreement),
at a price, not greater than $10.50 nor less than $9.50 per Share, net to the
seller in cash (the "Purchase Price"), to be selected by the Company, taking
into account the number of Shares so tendered and the prices specified by
stockholders tendering Shares. Provided a minimum of 250,000 Shares are
properly tendered and not withdrawn, the Company will select the lowest
Purchase Price that will allow the Company to buy 2,000,000 Shares (or such
lesser number as are properly tendered and not withdrawn) at a price not
greater than $10.50 nor less than $9.50, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated March 27, 1997 (the "Offer
to Purchase"), and in the related Letter of Transmittal (which together
constitute the "Offer"), copies of which are attached as Exhibits (a)(1) and
(a)(2), respectively. No separate consideration will be paid for the Rights.
The Offer is being made to all holders of Shares, including officers,
directors, and affiliates of the Company. The information set forth in
"Introduction," "Section 1. Number of Shares; Proration," "Section 10. Shares
Outstanding and Significant Stockholders; Certain Effects of the Offer,"
"Section 12. Interest of Directors and Executive Officers; Transactions and
Arrangements Concerning the Shares" and "Section 15. Extension of the Offer;
Termination; Amendments" of the Offer to Purchase is incorporated herein by
reference.
(c) The Shares are traded over-the-counter and are reported on the NASDAQ
National Market System under the symbol "ASTE." The information set forth in
the "Introduction" and "Section 7. Price Range of Shares; Dividends" of the
Offer to Purchase is incorporated herein by reference.
(d) This statement is being filed by the Issuer.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) - (b) The information set forth in "Section 9. Source and Amount of
Funds" of the Offer to Purchase is incorporated herein by reference. See also
Exhibits (b)(1) - (3) to this Schedule 13E-4.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a) - (j) The information set forth in the "Introduction," "Section 8.
Purpose of the Offer," "Section 10. Shares Outstanding and Significant
Stockholders; Certain Effects of the Offer," "Section 11. Certain Information
Concerning the Company" and "Section 12. Interest of Directors and Executive
Officers; Transactions and Arrangements Concerning the Shares" of the Offer to
Purchase is incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in "Section 12. Interest of Directors and
Executive Officers; Transactions and Arrangements Concerning the Shares" of the
Offer to Purchase is incorporated herein by reference.
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ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
The information set forth in the "Introduction," "Section 8. Purpose of
the Offer," "Section 10. Shares Outstanding and Significant Stockholders;
Certain Effects of the Offer" and "Section 12. Interest of Directors and
Executive Officers; Transactions and Arrangements Concerning the Shares" of the
Offer to Purchase is incorporated herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Section 16. Fees and Expenses" of the Offer
to Purchase is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a) - (b) The financial information set forth in "Section 11. Certain
Information Concerning the Company" of the Offer to Purchase is incorporated
herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
The information set forth in "Section 10. Shares Outstanding and
Significant Stockholders; Certain Effects of the Offer" and "Section 12.
Interest of Directors and Executive Officers; Transactions and Arrangements
Concerning the Shares" of the Offer to Purchase is incorporated herein by
reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
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EXHIBIT NO. DESCRIPTION
(a)(1) -- Form of Offer to Purchase dated March 27, 1997.
(a)(2) -- Form of Letter of Transmittal.
(a)(3) -- Form of Notice of Guaranteed Delivery.
(a)(4) -- Form of letter to brokers, dealers, commercial banks, trust
companies and other nominees dated March 27, 1997.
(a)(5) -- Form of letter to clients who are common stockholders for use
by brokers, dealers, commercial banks, trust companies and
other nominees dated March 27, 1997.
(a)(6) -- Form of letter to stockholders from the Chairman and Chief
Executive Officer of the Company dated March 27, 1997.
(a)(7) -- Form of letter to Participants for use by the Trustee of the
Company's 401(k)Plan.
(a)(8) -- Form of Instruction Form for 401(k) Plan Participants
(a)(9) -- Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(10) -- Form of Press Release dated March 27, 1997.
(b)(1) -- Credit Agreement, dated as of July 20, 1994, by and between
The First National Bank of Chicago and the Company
(incorporated by reference to Exhibit 10.87 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1994).
(b)(2) -- First Amendment to Credit Agreement, dated as of May 22,
1995, by and between The First National Bank of Chicago and
the Company (incorporated by reference to Exhibit 10.91 to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995).
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(b)(3) -- Commitment Letter and Term Sheet, dated as of March 25, 1997
between The First National Bank of Chicago and the Company.
(c) -- Not applicable.
(d) -- Not applicable.
(e) -- Not applicable.
(f) -- Not applicable.
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
ASTEC INDUSTRIES, INC.
By: /s/ Richard W. Bethea, Jr.
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RICHARD W. BETHEA, JR.
VICE PRESIDENT AND
CORPORATE COUNSEL
Dated: March 26, 1997
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
(a)(1) -- Form of Offer to Purchase dated March 27, 1997.
(a)(2) -- Form of Letter of Transmittal.
(a)(3) -- Form of Notice of Guaranteed Delivery.
(a)(4) -- Form of letter to brokers, dealers, commercial
banks, trust companies and other nominees
dated March 27, 1997.
(a)(5) -- Form of letter to clients who are common
stockholders for use by brokers, dealers,
commercial banks, trust companies and other
nominees dated March 27, 1997.
(a)(6) -- Form of letter to stockholders from the
Chairman and Chief Executive Officer of the
Company dated March 27, 1997.
(a)(7) -- Form of letter to Participants for use by the
Trustee of the Company's 401(k) Plan.
(a)(8) -- Form of Instruction Form for 401(k) Plan Participants
(a)(9) -- Form of Guidelines for Certification of
Taxpayer Identification Number on Substitute
Form W-9.
(a)(10) -- Form of Press Release dated March 27, 1997.
(b)(1) -- Credit Agreement, dated as of July 20, 1994, by and between The First
National Bank of Chicago and the Company (incorporated by reference to
Exhibit 10.87 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994).
(b)(2) -- First Amendment to Credit Agreement, dated as of May 22, 1995, by and
between The First National Bank of Chicago and the Company (incorporated
by reference to Exhibit 10.91 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995).
(b)(3) -- Commitment Letter and Term Sheet, dated as of March 25, 1997 between The
First National Bank of Chicago and the Company.
(c) -- Not applicable.
(d) -- Not applicable.
(e) -- Not applicable.
(f) -- Not applicable.
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ASTEC INDUSTRIES, INC.
OFFER TO PURCHASE FOR CASH UP TO
2,000,000 SHARES OF ITS COMMON STOCK
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THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME ON THURSDAY, MAY 1, 1997, UNLESS THE OFFER IS EXTENDED.
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Astec Industries, Inc., a Tennessee corporation (the "Company"), invites
its stockholders to tender shares of its Common Stock, par value $.20 per share
(the "Shares" or the "Common Stock") (including the associated preferred stock
purchase rights (the "Rights") issued pursuant to the Shareholder Protection
Rights Agreement) to the Company at a price, net to the seller in cash, not
greater than $10.50 nor less than $9.50 per Share, as specified by stockholders
tendering Shares upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which together
constitute the "Offer"). If 250,000 or more Shares are properly tendered and not
withdrawn, the Company will, upon the terms and subject to the conditions of the
Offer, determine a single price per Share, not greater than $10.50 nor less than
$9.50 per Share, net to the seller in cash (the "Purchase Price"), that it will
pay for the Shares properly tendered and not withdrawn pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
stockholders tendering Shares. The Company will select the lowest Purchase Price
that will allow it to buy 2,000,000 Shares (or such lesser number of Shares as
are properly tendered and not withdrawn) at a price not greater than $10.50 nor
less than $9.50 per Share pursuant to the Offer. No separate consideration will
be paid for the Rights. All Shares properly tendered at prices at or below the
Purchase Price and not withdrawn will be purchased at the Purchase Price, upon
the terms and subject to the conditions of the Offer, including the proration
terms and odd lot tender provisions described below.
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THE OFFER IS CONDITIONED UPON A MINIMUM OF NOT LESS THAN 250,000 SHARES
BEING PROPERLY TENDERED AND NOT WITHDRAWN AND IS SUBJECT TO CERTAIN OTHER
CONDITIONS. SEE SECTION 6.
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The Shares are listed and principally traded over-the-counter and are
reported on the NASDAQ National Market System under the symbol "ASTE." On March
26, 1997, the last full trading day prior to the announcement and commencement
of the Offer, the last sale price per Share as reported on the NASDAQ National
Market System was $8.875. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES. SEE SECTION 7.
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NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
STOCKHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. THE
COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE OFFICER OF THE COMPANY
INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER. STOCKHOLDERS MUST MAKE THEIR
OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND
THE PRICE OR PRICES AT WHICH SHARES SHOULD BE TENDERED.
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IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (1) complete and sign the Letter of Transmittal, or a
facsimile, in accordance with the instructions in the Letter of Transmittal, and
mail or deliver it and all other required documents to ChaseMellon Shareholder
Services, L.L.C. (the "Depositary"), and either mail or deliver the stock
certificates for such Shares to the Depositary or follow the procedure for
book-entry delivery set forth in Section 3, (2) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder, or (3) if the stockholder desires to tender
Shares beneficially owned in the Company's 401(k) Retirement Plan, as amended
and restated on March 1, 1987 (the "401(k) Plan"), such stockholder must follow
the procedures for 401(k) Plan beneficiaries set forth in Section 3.
Stockholders having Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee should contact such broker,
dealer, commercial bank, trust company, or other nominee if they desire to
tender such Shares. Stockholders desiring to tender Shares and whose
certificates for such Shares are not immediately available or who cannot comply
in a timely manner with the procedure for book-entry transfer by the expiration
of the Offer must tender such Shares by following procedures for guaranteed
delivery set forth in Section 3. STOCKHOLDERS MUST PROPERLY COMPLETE THE LETTER
OF TRANSMITTAL INCLUDING THE SECTION OF THE LETTER OF TRANSMITTAL RELATING TO
THE PRICE AT WHICH THEY ARE TENDERING SHARES IN ORDER TO EFFECT A VALID TENDER
OF THEIR SHARES.
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Questions and requests for assistance may be directed to the Information
Agent at the address and telephone number set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal or the Notice of Guaranteed Delivery may be obtained without expense
from the Information Agent.
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March 27, 1997
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THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS NOT AUTHORIZED ANY
PERSON TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION IN CONNECTION WITH THE
OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF
TRANSMITTAL. IF GIVEN OR MADE, ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY.
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TABLE OF CONTENTS
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PAGE
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INTRODUCTION..................................................... 2
1. Number of Shares; Proration................................. 3
2. Tenders by Holders of Fewer Than 100 Shares................. 5
3. Procedure For Tendering Shares.............................. 5
4. Withdrawal Rights........................................... 8
5. Acceptance for Payment and Payment for Shares............... 9
6. Certain Conditions of the Offer............................. 10
7. Price Range of Shares; Dividends............................ 11
8. Purpose of the Offer........................................ 12
9. Source and Amount of Funds.................................. 12
10. Shares Outstanding And Significant Stockholders; Certain
Effects of The Offer...................................... 13
11. Certain Information Concerning the Company.................. 14
12. Interest of Directors and Executive Officers; Transactions
and Arrangements Concerning the Shares.................... 17
13. Certain Legal Matters; Regulatory Approvals................. 18
14. Certain Federal Income Tax Consequences..................... 18
15. Extension of the Offer; Termination; Amendments............. 21
16. Fees and Expenses........................................... 21
17. Miscellaneous............................................... 22
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TO THE HOLDERS OF COMMON STOCK OF ASTEC INDUSTRIES, INC.:
INTRODUCTION
The Company invites its stockholders to tender shares of its Common Stock,
par value $.20 per share (the "Shares") (including the associated preferred
stock purchase rights (the "Rights") issued pursuant to the Shareholder
Protection Rights Agreement) to the Company at a price, net to the seller in
cash, not greater than $10.50 nor less than $9.50 per Share, as specified by
stockholders tendering Shares upon the terms and subject to the conditions set
forth in this Offer to Purchase and in the related Letter of Transmittal (which
together constitute the "Offer"). If 250,000 or more Shares are properly
tendered and not withdrawn, the Company will, upon the terms and subject to the
conditions of the Offer, determine a single price per Share, not greater than
$10.50 nor less than $9.50 per Share, net to the seller in cash (the "Purchase
Price"), that it will pay for the Shares properly tendered and not withdrawn
pursuant to the Offer, taking into account the number of Shares so tendered and
the prices specified by stockholders tendering Shares. The Company will select
the lowest Purchase Price that will allow it to buy 2,000,000 Shares (or such
lesser number of Shares as are properly tendered and not withdrawn) at a price
not greater than $10.50 nor less than $9.50 per Share pursuant to the Offer. No
separate consideration will be paid for the Rights. All Shares properly tendered
and not withdrawn at prices at or below the Purchase Price prior to the
Expiration Date (as defined in Section 1) will be purchased at the Purchase
Price, upon the terms and subject to the conditions of the Offer, including the
proration and odd lot tender provisions described below. See Section 1.
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THE OFFER IS CONDITIONED UPON A MINIMUM OF NOT LESS THAN 250,000 SHARES
BEING PROPERLY TENDERED AND NOT WITHDRAWN AND IS SUBJECT TO CERTAIN OTHER
CONDITIONS. SEE SECTION 6.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
STOCKHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. THE
COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE OFFICER OF THE COMPANY
INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER. SEE SECTION 10. STOCKHOLDERS
MUST MAKE THEIR OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY
SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE TENDERED.
If, at the Expiration Date, more than 2,000,000 Shares (or such greater
number of Shares as the Company may elect to purchase) are properly tendered and
not withdrawn, the Company will, upon the terms and subject to the conditions of
the Offer, accept Shares for purchase first from Odd Lot Owners (as defined in
Section 2) who properly tender their Shares at or below the Purchase Price and
then on a pro rata basis from all other stockholders whose Shares are properly
tendered at or below the Purchase Price and not withdrawn. The Company will
return all Shares not purchased, including Shares not purchased because of
proration. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 7 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Company
pursuant to the Offer. The Company will pay all fees and expenses of the
Depositary and the Information Agent in connection with the Offer.
As of March 10, 1997, there were 10,044,199 Shares outstanding. The
2,000,000 Shares that the Company is offering to purchase represent
approximately 20% of the outstanding Shares at March 10, 1997. The Shares are
traded over-the-counter and are reported on the NASDAQ National Market System
under the symbol "ASTE." On March 26, 1997, the last full trading day prior to
the announcement and commencement of the Offer, the last sale price per Share as
reported on the NASDAQ National Market System was $8.875. STOCKHOLDERS ARE URGED
TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. See Section 7.
1. NUMBER OF SHARES; PRORATION.
Upon the terms and subject to the conditions of the Offer, the Company will
accept for payment and purchase 2,000,000 Shares or such lesser number of Shares
subject to the minimum as are properly tendered on or prior to the Expiration
Date (and not withdrawn in accordance with Section 4) at a price (determined in
the manner set forth below) not greater than $10.50 nor less than $9.50 per
Share. The term "Expiration Date" means 5:00 p.m., New York City time, on
Thursday, May 1, 1997, unless the Company, in its sole discretion, shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by the Company, shall expire. For a description of the Company's
right to extend the period of time during which the Offer is open, and to delay,
terminate or amend the Offer, see Section 15. If the Offer is oversubscribed,
Shares tendered at or below the Purchase Price on or prior to the Expiration
Date will be subject to proration, except for Odd Lots as described below.
In accordance with Instruction 5 of the Letter of Transmittal, each
stockholder who wishes to tender Shares must specify the price (not greater than
$10.50 nor less than $9.50 per Share) at which such stockholder is willing to
have the Company purchase such Shares. The Company will, upon the terms and
subject to the conditions of the Offer, determine a single Purchase Price that
it will pay for the Shares properly tendered and not withdrawn pursuant to the
Offer, taking into account the number of Shares so tendered and the prices
specified by stockholders tendering Shares. The Company will select the lowest
Purchase Price that will allow it to buy 2,000,000 Shares, or such lesser number
subject to the minimum as are properly tendered and not withdrawn, at a price
not greater than $10.50 nor less than $9.50 per Share pursuant to the Offer.
All Shares purchased pursuant to the Offer will be purchased at the
Purchase Price. All Shares tendered and not purchased pursuant to the Offer,
including Shares tendered at a price greater than the Purchase Price
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and Shares not purchased because of proration or otherwise, will be returned to
the tendering stockholders at the Company's expense promptly following the
Expiration Date.
If the number of Shares properly tendered on or prior to the Expiration
Date (and not withdrawn in accordance with Section 4) is greater than 249,999
and less than or equal to 2,000,000 Shares (or such greater number of Shares as
the Company may elect to purchase pursuant to the Offer), the Company will, upon
the terms and subject to the conditions of the Offer, purchase at the Purchase
Price all Shares so tendered.
Upon the terms and subject to the conditions of the Offer, if at the
Expiration Date more than 2,000,000 Shares (or such greater number of Shares as
the Company elects to purchase) are properly tendered and not withdrawn at or
below the Purchase Price, the Company will accept Shares for purchase in the
following order of priority:
(a) first, all Shares properly tendered at or below the Purchase Price
prior to the Expiration Date (and not withdrawn) by an Odd Lot Owner (as
defined in Section 2, including any Shares beneficially owned by such Odd
Lot Owner in the Company's 401(k) Plan), who:
(1) tenders all Shares beneficially owned by such Odd Lot Owner at
or below the Purchase Price (partial tenders will not qualify for this
preference); and
(2) completes the Section entitled "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
and
(b) second, after purchase of all of the foregoing Shares, all other
Shares properly tendered at or below the Purchase Price, on or prior to the
Expiration Date (and not withdrawn), on a pro rata basis, if necessary
(with adjustments to avoid purchases of fractional Shares).
If proration of tendered Shares is required, the Company will determine the
final proration factor promptly after the Expiration Date. Proration for each
stockholder tendering Shares, other than Odd Lot Owners, will be based on the
ratio of the number of Shares tendered by such stockholder to the total number
of Shares tendered by all stockholders, other than Odd Lot Owners, at or below
the Purchase Price. Due to the difficulty in determining the number of Shares
properly tendered (including Shares tendered by guaranteed delivery procedures,
as described in Section 3) and not withdrawn, and because of the Odd Lot
procedure, the Company does not expect to be able to announce the final results
of such proration until approximately five trading days after the Expiration
Date. The preliminary results of any proration will be announced by press
release promptly after the Expiration Date. Stockholders may obtain such
preliminary information from the Information Agent and may be able to obtain
such information from their brokers.
As described in Section 14, the number of Shares that the Company will
purchase from a stockholder may affect the federal income tax consequences to
the stockholder of such purchase and therefore may be relevant to a
stockholder's decision whether to tender Shares. Each stockholder will be
afforded the opportunity to designate in the Letter of Transmittal the order of
priority in which Shares are to be purchased.
Pursuant to the provisions of a Shareholder Protection Rights Agreement
dated December 22, 1995, each share of Common Stock represents, in addition to
Common Stock, one right (the "Right"). Upon becoming exercisable, but prior to
the occurrence of certain events, each Right entitles the registered holder to
purchase one one-hundredth (1/100th) of one share (a "Unit") of Series A
Participating Preferred Stock, par value $1.00 per share (the "Preferred
Stock"), at a purchase price of $36.00 per Unit, subject to adjustment. The
Rights are not presently exercisable and trade together with the associated
share of Common Stock. The Rights will not become exercisable or separately
tradable as a result of the Offer. Absent circumstances causing the Rights to
become exercisable or separately tradable prior to the Expiration Date, the
tender of any Shares pursuant to the Offer will include the tender of the
associated Rights. No separate consideration will be paid for such Rights, and
sellers of Shares pursuant to the Offer will no longer own the Rights associated
with such Shares.
The Company reserves the right, in its sole discretion, to purchase
additional Shares pursuant to the Offer. If (i) the Company increases or
decreases the price to be paid for Shares, increases the number of Shares being
sought and such increase in the number of Shares being sought exceeds 2% of the
outstanding
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Shares or decreases the number of Shares being sought, and (ii) the Offer is
scheduled to expire at any time earlier than the expiration of a period ending
on the tenth business day from, and including, the date that notice of such
increase or decrease is first published, sent or given in the manner described
in Section 15, the Offer will be extended until the expiration of ten business
days from the date of publication of such notice. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or federal holiday
and consists of the time period from 12:01 a.m. through 12:00 p.m., New York
City time.
2. TENDERS BY HOLDERS OF FEWER THAN 100 SHARES.
For purposes of the Offer, the term "Odd Lots" means all Shares properly
tendered, in accordance with the procedures set forth in Section 3, on or prior
to the Expiration Date and not withdrawn, by or on behalf of stockholders ("Odd
Lot Owners") who owned, beneficially or of record, as of the Expiration Date,
fewer than 100 Shares (including any Shares beneficially owned by such Odd Lot
Owner in the 401(k) Plan). As set forth above, Odd Lots will be accepted for
purchase before proration. IN ORDER TO QUALIFY FOR THIS PREFERENCE, AN ODD LOT
OWNER MUST PROPERLY TENDER ALL SHARES BENEFICIALLY OWNED BY SUCH STOCKHOLDER.
PARTIAL TENDERS WILL NOT QUALIFY FOR THIS PREFERENCE. THE PREFERENCE IS NOT
AVAILABLE TO HOLDERS OF 100 OR MORE SHARES. ANY ODD LOT OWNER WISHING TO TENDER
ALL OF SUCH STOCKHOLDER'S SHARES BENEFICIALLY OWNED MUST COMPLETE THE SECTION
ENTITLED "ODD LOTS" IN THE LETTER OF TRANSMITTAL AND, IF APPLICABLE, ON THE
NOTICE OF GUARANTEED DELIVERY. Stockholders owning an aggregate of less than 100
Shares whose Shares are purchased pursuant to the Offer not only will avoid the
payment of brokerage commission, but also will avoid any applicable odd lot
discounts payable on a sale of their Shares in an over-the-counter transaction.
3. PROCEDURE FOR TENDERING SHARES.
Proper Tender of Shares. For Shares, other than Shares beneficially owned
by a stockholder in the 401(k) Plan ("401(k) Plan Shares"), to be properly
tendered pursuant to the Offer, (a) a properly completed and duly executed
Letter of Transmittal (or manually executed facsimile) with any required
signature guarantees and any other documents required by the Letter of
Transmittal must be received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase, and either certificates for the
Shares to be tendered must be transmitted to and received by the Depositary at
one of such addresses or such Shares must be tendered pursuant to the procedures
for book-entry transfer described below (and a confirmation of such tender
received by the Depositary), in each case on or prior to the Expiration Date, or
(b) the guaranteed delivery procedure described below must be followed.
As specified in Instruction 5 of the Letter of Transmittal, each
stockholder desiring to tender Shares pursuant to the Offer must properly
indicate in the section captioned "Price (In Dollars) Per Share of Common Stock
At Which Shares of Common Stock are Being Tendered" on the Letter of Transmittal
the price (in multiples of $.125) at which such stockholder's Shares are being
tendered. In addition, an Odd Lot Owner may check the box in the section
entitled "Odd Lots" indicating that such stockholder is tendering all of his or
her Shares at the Purchase Price. STOCKHOLDERS DESIRING TO TENDER SHARES AT MORE
THAN ONE PRICE MUST COMPLETE A SEPARATE LETTER OF TRANSMITTAL FOR EACH PRICE AT
WHICH SHARES ARE BEING TENDERED, EXCEPT THAT THE SAME SHARES CANNOT BE TENDERED
(UNLESS PROPERLY WITHDRAWN PREVIOUSLY IN ACCORDANCE WITH THE TERMS OF THE OFFER)
AT MORE THAN ONE PRICE. IN ORDER TO PROPERLY TENDER SHARES, ONE AND ONLY ONE
PRICE BOX MUST BE CHECKED IN THE APPROPRIATE SECTION ON EACH LETTER OF
TRANSMITTAL.
In addition, Odd Lot Owners who tender all of their Shares must complete
the section entitled "Odd Lots" on the Letter of Transmittal and, if applicable,
on the Notice of Guaranteed Delivery, in order to qualify for the preferential
treatment available to Odd Lot Owners as set forth in Section 1.
5
<PAGE> 13
Notwithstanding any other provision hereof, payment for Shares tendered and
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of certificates for such Shares (or a timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities, as defined below), a
properly completed and duly executed Letter of Transmittal (or manually executed
facsimile) with any required signature guarantees and any other documents
required by the Letter of Transmittal.
Book-entry Delivery. The Depositary will establish accounts with respect
to the Shares at The Depository Trust Company and the Philadelphia Depository
Trust Company (collectively referred to as "Book-Entry Transfer Facilities") for
purposes of the Offer within two business days after the date of this Offer to
Purchase, and any financial institution that is a participant in the system of
any Book-Entry Transfer Facility may make delivery of Shares into the
Depositary's account in accordance with the procedures of such Book-Entry
Transfer Facility. However, although delivery of Shares may be effected through
book entry transfer into the Depositary's account at a Book-Entry Transfer
Facility, a properly completed and duly executed Letter of Transmittal (or
manually executed facsimile) with any required signature guarantees and any
other required documents must, in any case, be transmitted to and received by
the Depositary at one of the addresses set forth on the back cover of this Offer
to Purchase by the Expiration Date, or the guaranteed delivery procedure
described below must be complied with. DELIVERY OF THE LETTER OF TRANSMITTAL AND
ANY OTHER REQUIRED DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees and Method of Delivery. No signature guarantee is
required on the Letter of Transmittal (i) if the Letter of Transmittal is signed
by the registered holder of the Shares (which term, for purposes of this Section
3 includes any participant in a Book-Entry Transfer Facility whose name appears
on a security position listing as the owner of Shares) exactly as the name of
the registered holder appears on the certificate tendered, and payment is to be
made directly to such registered holder, or (ii) if Shares are tendered for the
account of a member firm of a registered national securities exchange, a member
of the Stock Transfer Association's approved medallion program (such as STAMP,
SEMP or MSP) or a commercial bank or trust company having an office, branch or
agency in the United States (each such entity, an "Eligible Institution"). In
all other cases, all signatures on the Letter of Transmittal must be guaranteed
by an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If a
certificate representing Shares is registered in the name of a person other than
the signer of a Letter of Transmittal, or if payment is to be made, or Shares
not purchased or tendered are to be issued, to a person other than the
registered holder, the certificate must be endorsed or accompanied by an
appropriate stock power, in either case signed exactly as the name of the
registered holder appears on the certificate with the signature on the
certificate or stock power guaranteed by an Eligible Institution.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF CERTIFICATES FOR SHARES ARE TO
BE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED.
Backup Federal Income Tax Withholding and Withholding on Foreign
Stockholders. To prevent federal income tax backup withholding equal to 31% of
the gross payments made to stockholders for Shares purchased pursuant to the
Offer, each stockholder who does not otherwise establish an exemption from such
withholding must provide the Depositary with such stockholder's correct taxpayer
identification number (or certify that such taxpayer is awaiting a taxpayer
identification number) and provide certain other information by completing a
Substitute Form W-9 included with the Letter of Transmittal. Foreign
stockholders may be required to submit Form W-8, certifying non-United States
status, in order to avoid backup withholding.
Even if a foreign stockholder has provided the required certification to
avoid backup withholding, the Depositary will withhold federal income taxes
equal to 30% of the gross payments payable to a foreign stockholder or his agent
unless the Depositary determines that an exemption from or a reduced rate of
withholding is available pursuant to a tax treaty or an exemption from
withholding is applicable because such gross proceeds are effectively connected
with the conduct of a trade or business in the United States. In order
6
<PAGE> 14
to obtain an exemption from or a reduced rate of withholding pursuant to a tax
treaty, a foreign stockholder must deliver to the Depositary a properly
completed Form 1001. For this purpose, a foreign stockholder is a stockholder
that is not (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States, any State or any political subdivision thereof, or (iii) any
estate or trust the income of which is subject to United States federal income
taxation regardless of the source of such income. In order to obtain an
exemption from withholding on the grounds that the gross proceeds paid pursuant
to the Offer are effectively connected with the conduct of a trade or business
within the United States, a foreign stockholder must deliver to the Depositary a
properly completed Form 4224. The Depositary will determine a stockholder's
status as a foreign stockholder and eligibility for a reduced rate of, or an
exemption from, withholding by reference to any outstanding certificates or
statements concerning eligibility for a reduced rate of, or exemption from,
withholding (e.g., Form 1001 or Form 4224), unless facts and circumstances
indicate that such reliance is not warranted. A foreign stockholder may be
eligible to obtain a refund of all or a portion of any tax withheld if such
stockholder meets one of the three tests for sale treatment described in Section
14 or is otherwise able to establish that no tax or a reduced amount of tax is
due. Backup withholding generally will not apply to amounts subject to the 30%
or treaty-reduced rate of withholding. See Instructions 13 and 14 of the Letter
of Transmittal.
EACH STOCKHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO WHETHER
SUCH STOCKHOLDER IS SUBJECT TO OR EXEMPT FROM FEDERAL INCOME TAX WITHHOLDING.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder cannot deliver certificates for such Shares (or
the procedures for book-entry transfer cannot be completed on a timely basis) or
time will not permit all required documents to reach the Depositary on or prior
to the Expiration Date, such Shares may nevertheless be tendered if all of the
following conditions are met:
(a) such tender is made by or through an Eligible Institution;
(b) the Notice of Guaranteed Delivery properly completed and duly
executed, substantially in the form provided by the Company, is received by
the Depositary on or prior to the Expiration Date; and
(c) the certificates for all tendered Shares in proper form for
transfer (or a confirmation of a book-entry transfer of Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities),
together with a properly completed and duly executed Letter of Transmittal
(or a manually executed facsimile) and any required signature guarantees or
other documents required by the Letter of Transmittal, are received by the
Depositary within three trading days after the receipt by the Depositary of
such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in such Notice.
401(k) Plan Beneficiaries. If a stockholder desires to tender such
stockholder's 401(k) Plan Shares pursuant to the Offer, such stockholder must
instruct the trustee of the 401(k) Plan to tender such Shares by properly
completing, duly executing and returning to the trustee the Instruction Form
sent to such stockholder by the trustee. The trustee will aggregate all such
tenders and execute the requisite number of Letters of Transmittal on behalf of
all beneficiaries. DELIVERY OF A LETTER OF TRANSMITTAL BY A STOCKHOLDER OF
401(K) PLAN SHARES DOES NOT CONSTITUTE PROPER TENDER OF 401(K) PLAN SHARES.
PROPER TENDER OF 401(K) PLAN SHARES CAN ONLY BE MADE BY THE TRUSTEE, WHO IS THE
RECORD OWNER OF SUCH SHARES.
If a stockholder desires to tender Shares, as well as 401(k) Plan Shares,
such stockholder must properly complete and duly execute a Letter of Transmittal
for such Shares and deliver such Letter of Transmittal to the Depositary as well
as following the directions above for tendering 401(k) Plan Shares. The trustee
can not include non-401(k) Plan Shares in its Letter(s) of Transmittal.
7
<PAGE> 15
Determination of Validity, Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the Purchase Price,
number of Shares to be accepted, the form of documents and the validity,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Company, in its sole discretion, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any or all tenders of Shares determined by it not
to be in proper form or the acceptance for payment of or payment for which may,
in the opinion of the Company's counsel, be unlawful. The Company also reserves
the absolute right to waive any of the conditions of the Offer or any defect or
irregularity in any tender of Shares, and the Company's interpretation of the
terms of the Offer (including the instructions in the Letter of Transmittal)
will be final and binding on all parties. No tender of Shares will be deemed to
be properly made until all defects and irregularities have been cured or waived.
None of the Company, the Information Agent, the Depositary, or any other person
will be under any duty to give notification of any defect or irregularity in
tenders or incur any liability for failure to give any such notice.
Tender Constitutes an Agreement. The tender of Shares pursuant to any one
of the procedures described above will constitute the tendering stockholder's
acceptance of the terms and conditions of the Offer and a binding agreement
between the tendering stockholder and the Company.
It is a violation of Rule 14e-4 promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), for a person, directly or
indirectly, to tender Shares for such stockholder's own account unless, at the
time of the tender and at the end of the proration period, the person so
tendering (a) has a net long position equal to or greater than the amount of (i)
Shares tendered or (ii) other securities immediately convertible into, or
exercisable or exchangeable for the amount of Shares tendered and will acquire
such Shares for tender by conversion, exercise or exchange of such other
securities, and (b) will cause such Shares to be delivered in accordance with
the terms of the Offer. Rule 14e-4 promulgated under the Exchange Act provides a
similar restriction applicable to the tender or guarantee of a tender on behalf
of another person. The tender of Shares pursuant to any one of the procedures
described above will constitute the tendering stockholder's acceptance of the
terms and conditions of the Offer as well as the tendering stockholder's
representation and warranty that (a) such stockholder has a net long position in
the Shares being tendered within the meaning of Rule 14e-4 and (b) the tender of
such Shares complies with Rule 14e-4.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares pursuant
to the Offer will be irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless accepted for
payment by the Company as provided in this Offer to Purchase, may also be
withdrawn after 12:00 midnight, New York City time, on May 21, 1997.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If the certificates have been delivered or otherwise identified to the
Depositary, then, prior to the release of such certificates, the tendering
stockholder must submit the serial numbers shown on the particular certificates
evidencing the Shares to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution, except in the case of
Shares tendered by an Eligible Institution. If Shares have been tendered
pursuant to the procedure for book-entry transfer set forth in Section 3, the
notice of withdrawal must specify the name and the number of the account at the
applicable Book-Entry Transfer Facility to be credited with the withdrawn Shares
and otherwise comply with the procedures of such facility. All questions as to
the form and validity (including time of receipt) of notices of withdrawal will
be determined by the Company, in its sole discretion, which determination shall
be final and binding. None of the Company, the Depositary, the Information Agent
or any other person shall be obligated to give any notice of any defects or
irregularities in any notice of withdrawal and none of them shall incur any
liability for failure to give any such notice. Any Shares properly withdrawn
will thereafter be deemed not
8
<PAGE> 16
tendered for purposes of the Offer. However, withdrawn Shares may be retendered
on or prior to the Expiration Date by again following any of the procedures
described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares or
is unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain on behalf of the Company all tendered Shares, and the
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in this Section 4.
5. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer, and promptly
after the Expiration Date, the Company will determine a single Purchase Price
that it will pay for the Shares properly tendered and not withdrawn, taking into
account the number of Shares tendered and the prices specified by stockholders
tendering Shares, and will (subject to the proration terms and Odd Lot tender
provisions of the Offer) accept for payment (and thereby purchase) and pay for
Shares validly tendered at or below the Purchase Price and not withdrawn as
permitted in Section 4. Promptly following the determination of the Purchase
Price, the Company will announce the Purchase Price it will pay for tendered
Shares. In all cases, payment for Shares accepted for payment pursuant to the
Offer will be made promptly (subject to possible delay in the event of
proration) but only after timely receipt by the Depositary of certificates for
Shares (or of a confirmation of a book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities), a properly
completed and duly executed Letter of Transmittal (or manually executed
facsimile thereof) and any other required documents.
For purposes of the Offer, the Company will be deemed to have accepted for
payment, subject to proration, Shares tendered at or below the Purchase Price
and not withdrawn if, as and when the Company gives oral or written notice to
the Depository of its acceptance of such Shares for payment pursuant to the
Offer. Payment of Shares accepted for payment pursuant to the Offer will be made
by depositing the aggregate Purchase Price for such Shares with the Depository,
which will act as agent for the tendering stockholders for the purpose of
receiving payment from the Company and transmitting such payments to tendering
stockholders.
In the event of proration, the Company will determine the proration factor
and pay for those tendered Shares accepted for payment as soon as practicable
after the Expiration Date; however, the Company does not expect to be able to
announce the final results of any such proration until approximately five
trading days after the Expiration Date. Certificates for all Shares not
purchased, including Shares not purchased due to proration, will be returned
(or, in the case of Shares tendered by book-entry transfer, such Shares will be
credited to the account maintained within such Book Entry Transfer Facility by
the participant who so delivered such Shares) as soon as practicable after the
Expiration Date or termination of the Offer without expense to the tendering
stockholder. Under no circumstances will interest be paid by the Company by
reason of any delay in paying for any Shares or otherwise. In addition, if
certain events occur, the Company may not be obligated to purchase Shares
pursuant to the Offer. See Section 6.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer, except if payment of
the Purchase Price is to be made to, or (in the circumstances permitted by the
Offer) Shares not tendered or not accepted for purchase are to be registered in
the name of, any person other than the registered holder, or if tendered
certificates are registered in the name of any person other than the person
signing the Letter of Transmittal. In such circumstances, the amount of all
stock transfer taxes, if any (whether imposed on the registered holder or such
other person), payable on account of the transfer to such person will be
deducted from the Purchase Price unless evidence satisfactory to the Company of
the payment of such taxes or exemption therefrom is submitted. See Instruction 7
of the Letter of Transmittal.
9
<PAGE> 17
ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND
SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL MAY BE
SUBJECT TO REQUIRED FEDERAL INCOME TAX BACKUP WITHHOLDING OF 31% OF THE GROSS
PROCEEDS PAID TO SUCH STOCKHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE
SECTION 3.
6. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other condition or provision of the Offer, the Company
shall not be required to accept for payment, purchase or pay for any Shares
tendered and may terminate or amend the Offer or may postpone the acceptance for
payment of, or the payment for, Shares tendered, if at any time on or after
March 27, 1997 and at or before the payment for any such Shares, any of the
following events shall have occurred (or shall have been determined by the
Company to have occurred) which, in the Company's sole judgment in any such case
and regardless of the circumstances (including any action or omission to act by
the Company), makes it inadvisable to proceed with the Offer or with such
acceptance for purchase or payment:
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental authority or regulatory or
administrative agency, domestic or foreign, or by any other person,
domestic or foreign, before any court or governmental authority or
regulatory or administrative agency, domestic or foreign, (i) that
challenges or seeks to make illegal, or delay or otherwise directly or
indirectly restrain or prohibit the making of the Offer, the acceptance for
payment of or payment for some or all of the Shares by the Company or
otherwise directly or indirectly relating in any manner to or affecting the
Offer, or (ii) that otherwise, in the sole judgment of the Company, has or
may have a material adverse effect on the business, financial condition,
income, operations or prospects of the Company and its subsidiaries taken
as a whole or has or may materially impair the contemplated benefits of the
Offer to the Company; or
(b) any action shall have been threatened, instituted, pending or
taken or approval withheld or any statute, rule, regulation, judgment or
order or injunction proposed, sought, enacted, enforced, promulgated,
amended, issued or deemed applicable to the Offer or the Company or any of
its subsidiaries by any court, government or governmental authority or
regulatory or administrative agency, domestic or foreign, that, in the sole
judgment of the Company might, directly or indirectly, result in any of the
consequences referred to in clauses (i) or (ii) of paragraph (a) above; or
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, (ii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States, (iv) any limitation by any governmental, regulatory or
administrative authority or agency or any other event that, in the sole
judgment of the Company, might affect the extension of credit by banks or
other lending institutions, (v) any significant decrease in the market
price of the Shares or any change in the general political, market,
economic or financial conditions in the United States or abroad that has or
may have a material adverse effect with respect to the Company's business,
operations or prospects or the trading in the Shares, (vi) any increase of
10% or more in the market price per Share, (vii) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof, or (viii) any decline in either the Dow
Jones Industrial Average (6884.86 at the close of business on March 26,
1997) or the Standard and Poor's Index of 500 Industrial Companies (791.14
at the close of business on March 26, 1997) by an amount in excess of 10%,
measured from the close of business on March 26, 1997; or
(d) a tender or exchange offer for some or all of the Shares (other
than the Offer) or a proposal with respect to a merger, consolidation or
other business combination with or involving the Company or any subsidiary
shall have been proposed to be made or shall have been made by another
person; or
(e) (i) any entity, group (as that term is used in Section 13(d)(3) of
the Exchange Act), or person (other than entities, groups or persons, if
any, who have filed with the Securities and Exchange Commission (the
"Commission") on or before March 27, 1997, a Schedule 13G or a Schedule 13D
with
10
<PAGE> 18
respect to any of the Shares) shall have acquired or proposed to acquire
beneficial ownership of more than 5% of the outstanding Shares; or
(ii) such entity, group or person that has publicly disclosed any
such beneficial ownership of more than 5% of the Shares prior to such
date shall have acquired, or proposed to acquire, beneficial ownership
of additional Shares constituting more than 2% of the outstanding Shares
or shall have been granted any option or right to acquire beneficial
ownership of more than 2% of the outstanding Shares; or
(iii) any person or group shall have filed a Notification and
Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 reflecting an intent to acquire the Company or any of its Shares;
or
(f) the Company shall have failed to obtain an amendment to its
existing credit facility with The First National Bank of Chicago or
established a new credit facility for the repurchase of the Shares; or
(g) the Company determines that as a result of the Offer the number of
record holders of the Company's Common Stock may fall below 350; or
(h) any change or changes have occurred (or any development shall have
occurred involving any prospective change or changes) in the business,
assets, liabilities, condition (financial or otherwise), operations,
results of operations or prospects of the Company or any of its
subsidiaries that, in the sole judgment of the Company, have or may have a
material effect with respect to the Company and its subsidiaries taken as a
whole.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company in its sole discretion regardless of the circumstances
(including any action or inaction by the Company) giving rise to any such
conditions, or may be waived by the Company in its sole discretion, in whole or
in part, at any time. The failure by the Company at any time to exercise its
rights under any of the foregoing conditions shall not be deemed a waiver of any
such right; the waiver of any such right with respect to particular facts and
other circumstances shall not be deemed a waiver with respect to any other facts
and circumstances; and each such right shall be deemed an ongoing right which
may be asserted at any time or from time to time. Any determination by the
Company concerning the events described in this Section 6 shall be final and
binding on all parties.
7. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are listed and principally traded over-the-counter and are
reported on the NASDAQ National Market System under the symbol "ASTE." The
following table sets forth for the periods indicated the high and low sales
prices per Share as reported by the NASDAQ National Market System as compiled
from published financial sources in each such fiscal quarter.
<TABLE>
<CAPTION>
COMMON STOCK
------------------
HIGH LOW
------- -------
<S> <C> <C>
Fiscal 1997:
First Quarter (through March 26, 1997).................... $ 9.750 $ 8.500
Fiscal 1996:
First Quarter............................................. $10.625 $ 9.125
Second Quarter............................................ 11.125 8.250
Third Quarter............................................. 9.125 8.125
Fourth Quarter............................................ 9.750 8.375
Fiscal 1995:
First Quarter............................................. $14.250 $11.000
Second Quarter............................................ 13.125 10.875
Third Quarter............................................. 11.750 9.875
Fourth Quarter............................................ 12.250 9.750
</TABLE>
On March 26, 1997, the last full trading day prior to the announcement and
commencement of the Offer, the closing sale price per Share reported on the
NASDAQ National Market System was $8.875. STOCKHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE SHARES.
11
<PAGE> 19
The Company has never declared or paid any cash dividends. The Company is
prohibited from paying dividends (other than dividends payable in shares of
Common Stock) on its Common Stock under the terms of its existing Credit
Agreement (as described in Paragraph 9 below).
8. PURPOSE OF THE OFFER.
The Board of Directors has determined that the Company's financial
condition and outlook and current market conditions, including recent trading
prices of the Shares, make this an attractive time to repurchase a significant
portion of the outstanding Shares, taking into account the significantly
increased interest expense and debt amortization and financial and operating
constraints associated with the borrowing required to fund the Offer. In the
view of the Board of Directors, the Offer represents a significant acceleration
of what would otherwise have been a continuing share repurchase program and an
attractive investment and use of the Company's cash generation abilities that
should benefit the Company and its shareholders over the long term. In
particular, the Board of Directors believes that the purchase of Shares at this
time is consistent with the Company's long term corporate goal of seeking to
increase shareholder value.
Accordingly, the Company is providing stockholders with the opportunity to
determine the price or prices (not greater than $10.50 nor less than $9.50 per
Share at which they are willing to sell their Shares), subject to the terms and
conditions of the Offer, and without the usual transaction costs associated with
market sales. In addition, the Offer may give stockholders the opportunity to
sell Shares at a price greater than market prices prevailing prior to
announcement and commencement of the Offer. The Offer also allows stockholders
to sell a portion of their Shares while retaining a continuing equity interest
in the Company if they so desire. In addition, Odd Lot Owners whose Shares are
purchased pursuant to the Offer not only will avoid the payment of brokerage
commissions but also will avoid any applicable odd lot discounts payable on a
sale of their Shares in an over-the-counter transaction.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY OR ALL OF
SUCH STOCKHOLDER'S SHARES AND NEITHER HAS AUTHORIZED ANY PERSON TO MAKE ANY SUCH
RECOMMENDATION. STOCKHOLDERS ARE URGED TO EVALUATE FULLY ALL INFORMATION IN THE
OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN
DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE
PRICE OR PRICES AT WHICH TO TENDER.
The Company may in the future purchase Shares on the open market, in
privately negotiated transactions, through tender offers or otherwise. Any such
purchases may be on the same terms as, or on terms which are more or less
favorable to stockholders than, the terms of the Offer. However, Rule
13e-4(f)(6) under the Exchange Act prohibits the Company and its affiliates from
purchasing any Shares, other than pursuant to the Offer, until at least ten
business days after the expiration or termination of the Offer. Any possible
future purchases by the Company will depend on many factors, including the
market price of the Shares, the results of the Offer, the Company's business and
financial position and general economic and market conditions.
9. SOURCE AND AMOUNT OF FUNDS.
The Company has an existing credit facility with The First National Bank of
Chicago ("First Chicago") dated July 20, 1994, as amended (the "Credit
Agreement"). The Credit Agreement is a three-year revolving unsecured credit
facility for the Company and its subsidiaries in an aggregate committed amount
of $22,000,000. In addition, the Company has an $8 million letter of credit from
First Chicago to support industrial development bonds.
Loans outstanding under the Credit Agreement bear interest (subject to
certain potential adjustments) at a rate per annum equal to the corporate base
rate (prime) less 25 basis points (.25%) or the Eurodollar rate plus 125 basis
points (1.25%), at the Company's option. As of March 26, 1997, the outstanding
balance under the Credit Agreement was $10,000,000.
If the Company were to purchase 2,000,000 Shares pursuant to the Offer at a
Purchase Price of $10.50 per Share (the highest price in the range of possible
purchase prices), the maximum aggregate cost of the
12
<PAGE> 20
Offer would be approximately $21,450,000 (which includes $450,000 in estimated
transaction costs). In order to finance the repurchase of the Shares pursuant to
the terms of this Offer, the Company has obtained a written commitment (the
"Commitment Letter") from First Chicago to amend and restate the Credit
Agreement to increase the size of this facility to permit additional borrowings
of up to $22,000,000.
The proposed amendment and restatement of the Credit Agreement (the "New
Credit Agreement") will be entered into only if the Company, after evaluating
the response to the Offer and its cash position, determines that additional
borrowing contemplated by the New Credit Agreement is needed in order to fund
the repurchase of the Shares. First Chicago has committed that the New Credit
Agreement would be a five-year revolving unsecured credit facility for the
Company and its subsidiaries in an aggregate committed amount of up to
$52,000,000, comprised of the $22,000,000 in borrowing capacity under the
existing Credit Agreement, the $8 million letter of credit already issued by the
bank to support industrial development bonds, and up to $22,000,000 in new
borrowings, if needed, to fund the repurchase of the Shares.
Loans outstanding under the New Credit Agreement would bear interest on a
sliding scale (subject to certain adjustments) with the lowest rate per annum
being equal to the corporate base rate (prime) less 25 basis points (.25%) or
the Eurodollar rate plus 75 basis points (.75%) at the Company's option, and the
highest rate per annum being equal to the corporate base rate (prime) plus 50
basis points (.50%) or the Eurodollar rate plus 200 basis points (2.0%) at the
Company's option.
The applicable interest rate will be adjusted quarterly based on the ratio
of the Company's long term debt (maturity one year or longer) to its earnings
before interest, taxes, depreciation and amortization.
By July 15, 1999, the Company would be required to reduce the commitment
under the New Credit Agreement by one-third of the amount borrowed to fund the
repurchase of the stock. Additional reductions of the same amount would be
required in the subsequent two years.
If the Company were to use borrowings under the New Credit Agreement, the
Company would expect to repay such borrowings, depending on business and market
conditions, through internally generated funds, other borrowings or a
combination of the foregoing.
The preceding summary of the Credit Agreement and the Commitment Letter is
qualified in its entirety by reference to the text of the Credit Agreement and
the Commitment Letter, which are filed as exhibits to the Issuer Tender Offer
Statement on Schedule 13E-4 of which this Offer to Purchase forms a part. A copy
of the Schedule 13E-4 may be obtained from the Commission in the manner provided
in Section 11 under the heading "-- Additional Information."
10. SHARES OUTSTANDING AND SIGNIFICANT STOCKHOLDERS; CERTAIN EFFECTS OF THE
OFFER.
As of March 10, 1997, the Company had issued and outstanding 10,044,199
Shares. The 2,000,000 Shares that the Company is offering to purchase pursuant
to the Offer represent approximately 20% of the Shares then outstanding.
The Company has been advised that no director or executive officer of the
Company intends to tender any Shares pursuant to the Offer.
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that otherwise might trade publicly and may reduce the number of
stockholders. Nonetheless, the Company anticipates that there will be a
sufficient number of Shares outstanding and publicly traded following the Offer
to ensure a continued trading market for the Shares. Based upon published
guidelines of the NASDAQ National Market System, the Company does not believe
that its purchase of Shares pursuant to the Offer will cause the Company's
remaining Shares to be delisted from the NASDAQ National Market System.
The Shares are registered under the Exchange Act which requires, among
other things, that the Company furnish certain information to its stockholders
and to the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's stockholders. The Company has no reason to
believe that the purchase of Shares pursuant to the Offer will result in the
Shares becoming eligible for deregistration under the Exchange Act.
13
<PAGE> 21
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit to their customers using the Shares as collateral. Following the
repurchase of Shares pursuant to the Offer, the Shares will continue to be
margin securities for purposes of the Federal Reserve Board's margin
regulations.
Shares acquired by the Company pursuant to the Offer will be authorized but
unissued shares and will be available for future issuance.
11. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company designs, engineers, manufactures and markets equipment and
components used primarily in road building and related construction activities.
The company's principal road building products include: hot mix asphalt plants;
material transfer vehicles and asphalt paving equipment; rock crushing plants
and aggregate processing equipment; asphalt heaters; and equipment used in
moving and recycling asphalt and concrete from old roads and other surfaces. The
Company also manufactures trenching and excavating equipment; environmental
remediation equipment and other industrial heat transfer equipment. The
Company's products are used in each phase of the road building process from
quarrying and crushing the aggregate to application of the road surface. All of
the Company's equipment is manufactured to specifications which meet or exceed
emission requirements under federal and state clean air standards. The Company
holds over 65 United States and 63 foreign patents, and has been responsible for
many technological and engineering innovations in the industry. The company
currently manufactures over 140 different products.
The Company markets its products both domestically and internationally. The
principal purchasers of the Company's products for road building and related
construction activities include highway and heavy equipment contractors, utility
contractors, pipeline contractors, open mine operators, quarry operators and
foreign and domestic governmental agencies. International sales represented
approximately 17.3% of net sales for 1996 and included sales in Mexico, Europe,
the Middle East, Asia, Canada, Africa, Australia, South America and the West
Indies.
The Company's strategy is to become the high quality, low cost producer in
each of its product lines while continuing to develop innovative new products
for its customers.
14
<PAGE> 22
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
Set forth below is certain summary historical consolidated financial
information of the Company and its subsidiaries. The historical financial
information (other than the ratio of earnings before fixed charges to fixed
charges) has been derived from the audited consolidated financial statements
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1996 (the "Company's 1996 Annual Report") and other information and data
contained in the Company's 1996 Annual Report. The data should be read in
conjunction with the consolidated financial statements, related notes, and other
financial information, incorporated by reference herein. More comprehensive
financial information is included in such reports and the financial information
which follows is qualified in its entirety by reference to such reports and all
of the financial statements and related notes contained therein, copies of which
may be obtained as set forth below under the caption "Additional Information."
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------
1996 1995
-------- --------
<S> <C> <C>
CONSOLIDATED STATEMENT OF INCOME DATA:
Net sales................................................... $221,413 $242,601
Net income.................................................. 4,345 4,560
Net income per common share(1).............................. .43 .45
Weighted average number of shares outstanding............... 10,047 10,072
Ratio of earnings to fixed charges(2)....................... 5.02 3.77
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------
1996 1995
-------- --------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital............................................. $ 69,884 $ 58,015
Total assets................................................ 167,853 154,356
Total assets less excess of cost of assets acquired over
book value................................................ 162,568 150,290
Total indebtedness.......................................... 32,548 17,924
Shareholders' equity........................................ 99,393 95,901
Book value per common share(3).............................. 9.84 9.50
</TABLE>
- ---------------
NOTES TO SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(1) All per share data (other than book value per share) is calculated on the
weighted average number of shares outstanding during the period. The
potential dilutive effect from the issuance of options is not material.
(2) The ratio of earnings before fixed charges to fixed charges were computed by
using the amounts for the Company, its consolidated subsidiaries and its
proportionate share of losses incurred by its fifty percent owned affiliate.
Earnings available for fixed charges consist of earnings before income
taxes, equity in loss of fifty percent owned affiliate, amortization of
capitalized interest and fixed charges. Fixed charges consist of interest
expense plus that portion of rental expense deemed to be equivalent of
interest and amortization of debt issue costs.
(3) Book value per common share is calculated as total shareholders' equity
divided by the number of common shares outstanding, net of treasury shares,
at the end of the period.
15
<PAGE> 23
SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
The following summary unaudited consolidated pro forma financial
information gives effect to the purchase of the Shares pursuant to the Offer
based on certain assumptions described in the Notes to Summary Unaudited
Consolidated Pro Forma Financial Information and gives effect to the purchase of
the Shares pursuant to the Offer as if it had occurred on January 1, 1996 with
respect to the consolidated statement of income data and December 31, 1996 with
respect to the consolidated balance sheet data. The summary unaudited
consolidated pro forma financial information should be read in conjunction with
the summary consolidated historical financial information and does not purport
to be indicative of the results that would actually have been obtained had the
purchase of the Shares pursuant to the Offer been completed at the dates
indicated or that may be obtained in the future.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------------------------
PRO FORMA
--------------------------------
ASSUMED ASSUMED
$10.50 $9.50
PER SHARE PER SHARE
HISTORICAL PURCHASE PRICE PURCHASE PRICE
---------- -------------- --------------
(IN THOUSANDS, EXCEPT RATIOS AND
PER SHARE AMOUNTS)
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME DATA:
Net sales............................................. $221,413 $221,413 $221,413
Net income............................................ 4,345 3,289 3,384
Net income per common share........................... 0.43 0.41 0.42
Weighted average number of shares outstanding......... 10,047 8,047 8,047
Ratio of earnings to fixed charges.................... 5.02 2.54 2.66
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------------------------
PRO FORMA
--------------------------------
ASSUMED ASSUMED
$10.50 $9.50
PER SHARE PER SHARE
HISTORICAL PURCHASE PRICE PURCHASE PRICE
---------- -------------- --------------
(IN THOUSANDS, EXCEPT RATIOS AND
PER SHARE AMOUNTS)
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital....................................... $ 69,884 $ 69,884 $ 69,884
Total assets.......................................... 167,853 168,117 168,117
Total assets less excess of cost of assets acquired
over book value..................................... 162,568 162,832 162,832
Total indebtedness.................................... 32,548 53,998 51,998
Shareholders' equity.................................. 99,393 77,217 79,312
Book value per common share........................... 9.84 9.53 9.79
</TABLE>
- ---------------
NOTES TO SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
The following assumptions regarding the Offer were made in determining the
pro forma financial information:
(1) The information assumes 2,000,000 Shares are purchased at $9.50 per share
and $10.50 per share with the purchase being financed under the Company's
Credit Agreement bearing interest at 7.63% in fiscal 1996.
(2) Expenses directly related to the Offer are assumed to be $450,000. Of this
amount, $330,000 is treated as debt issue costs and the remaining $120,000
is included as part of the cost of the Shares acquired.
(3) The ratio of earnings before fixed charges to fixed charges were computed by
using the amounts for the Company, its consolidated subsidiaries and its
proportionate share of losses incurred by its fifty percent owned affiliate.
Earnings available for fixed charges consist of earnings before income
taxes, equity in loss of fifty percent owned affiliate, amortization of
capitalized interest and fixed charges. Fixed charges
16
<PAGE> 24
consist of interest expense plus that portion of rental expense deemed to be
equivalent of interest and amortization of debt issue costs.
(4) Book value per common share is calculated as total stockholders' equity
divided by the number of common shares outstanding, net of treasury shares,
at the end of the period.
(5) All per share data (other than book value per share) is calculated on the
weighted average number of shares outstanding during the period. The
potential dilutive effect from the issuance of options is not material.
Additional Information. The Company is subject to the information
requirements of the Exchange Act, and in accordance therewith, files periodic
reports, proxy statements and other information with the Commission relating to
its business, financial condition and other matters. The Company is required to
disclose in such proxy statements certain information, as of particular dates,
concerning the Company's directors and officers, their compensation, stock
options granted to them, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company. The
Company has also filed an Issuer Tender Offer Statement on Schedule 13E-4 with
the Commission. Such material and other information may be inspected at the
public reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; and (except for the
Issuer Tender Offer Statement) are also available for inspection and copying at
the following regional offices of the Commission: Seven World Trade Center,
Suite 1300, New York 10048; and CitiCorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can also be obtained by
mail, upon payment of the Commission's customary charges, by writing to the
Public Reference Section at 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549. The Commission also maintains a web site at http://www.sec.gov which
contains reports, proxy statements and other information regarding registrants
that file electronically with the Commission.
12. INTEREST OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING THE SHARES.
Robert G. Stafford, a Director of the Company and President of Telsmith,
Inc., a subsidiary of the Company, exercised a stock option to purchase 7,000
Shares of the Company on February 25, 1997, at an exercise price of $4.675 per
Share. Of the 7,000 Shares purchased, Mr. Stafford sold 3,750 of the Shares on
the same day through his broker at a per Share price of $8.875.
On March 20, 1995, the Company acquired all of the issued and outstanding
shares of Trace Industries, Inc., a New Mexico corporation doing business as CEI
Enterprises ("CEI"), in exchange for $852,004 in cash and 87,333 shares of
Company Common Stock. Prior to this acquisition, CEI was a closely held company
with four shareholders including Mr. Brent England, its President. In connection
with this transaction, CEI was merged into a wholly owned subsidiary of the
Company with Mr. England continuing to serve as President of the successor
corporation and, as such, is currently an officer of the Company. In lieu of
providing registration rights to the former shareholders of CEI with respect to
the shares of Company Common Stock being issued in this transaction, the Company
granted each such shareholder the right to require the Company to redeem the
shares at any time within two years of the closing date at a price of $12.00 per
share. Mr. England received 23,333 shares of Company Common Stock in connection
with this transaction and on March 3, 1997 provided notice to the Company of the
exercise of his redemption right at $12.00 per share.
Other than as set forth above, neither the Company, nor any executive
officer or director of the Company, any person controlling the Company, any
executive officer and director of any person controlling the Company or any
associate or subsidiary of any such person (including any executive officer or
director of any such subsidiary), has engaged in any transaction involving
Shares during the period of forty business days prior to the date hereof.
Neither the Company nor, to the Company's knowledge, any of its executive
officers, directors or affiliates is a party to any contract, arrangement,
understanding or relationship relating, directly or indirectly, to the Offer
with any other person with respect to Shares (including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any such securities, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
17
<PAGE> 25
withholding of proxies, consents or authorizations). Except for the Offer,
neither the Company nor its executive officers or directors has current plans or
proposals which relate to or would result in any extraordinary corporate
transaction involving the Company, such as a merger, reorganization, sale or
transfer of a material amount of its assets or the assets of any of its
subsidiaries, taken as a whole, any change in its present Board of Directors or
management, except as disclosed in the Company's proxy statement dated March 24,
1997 with respect to the 1997 Annual Meeting of Shareholders, any material
change in its present dividend policy or capitalization, any other material
change in its business or corporate structure, any material change in its
Restated Certificate of Incorporation or Bylaws, or any actions causing a class
of its equity securities to become eligible for termination of registration
pursuant to Section 12(g)(4) of the Exchange Act, or the suspension of the
Company's obligation to file reports pursuant to Section 15(d) of the Exchange
Act, or any actions similar to any of the foregoing. In connection with this
Offer, the Company does intend to increase the size of its existing credit
facility with The First National Bank of Chicago and to use such additional
borrowing capacity to finance the repurchase of the Shares.
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
The Company is not aware of any license or regulatory permit that it
believes is material to the Company's business that might be adversely affected
by the Company's acquisitions of Shares as contemplated herein or of any
approval or other action by any government or governmental, administrative or
regulatory authority or agency, domestic or foreign, that would be required for
the acquisition or ownership of Shares by the Company as contemplated herein.
Should any such approval or other action be required, the Company presently
contemplates that such approval or other action will be sought. The Company is
unable to predict whether it will be required to delay the acceptance for
payment of, or payment for, Shares tendered pursuant to the Offer pending the
outcome of any such matter. There can be no assurance that any such approval or
other action, if needed, would be obtained or would be obtained without
substantial conditions or that the failure to obtain any such approval or other
action might not result in adverse consequences to the Company's business. The
Company's obligations under the Offer to accept for payment and pay for Shares
are subject to certain conditions. See Section 6.
14. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a general summary under currently applicable law of
certain federal income tax considerations generally applicable to the Offer. The
discussion set forth below is for general information only and the tax treatment
described herein may vary depending upon each stockholder's particular
circumstances and tax position. Certain stockholders (including insurance
companies, tax-exempt organizations, financial institutions or broker-dealers,
foreign corporations, persons who are not citizens or residents of the United
States, stockholders who do not hold their Shares as capital assets and
stockholders who have acquired their Shares upon the exercise of options or
otherwise as compensation) may be subject to special rules not discussed below.
The Company will not apply for a ruling from the Internal Revenue Service
("IRS") with respect to the federal income tax consequences discussed herein
and, accordingly, there can be no assurance that the IRS will agree with the
conclusions stated. The discussion does not consider the effect of any
applicable foreign, state, local or other tax laws. EACH STOCKHOLDER SHOULD
CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO HIM
OR HER OF THE OFFER, INCLUDING THE APPLICABILITY AND EFFECT OF ANY FOREIGN,
STATE, LOCAL OR OTHER TAX LAWS, ANY RECENT CHANGES IN APPLICABLE TAX LAWS AND
ANY PROPOSED LEGISLATION.
General. A stockholder's exchange of Shares for cash pursuant to the Offer
will be a taxable transaction for federal income tax purposes, and may also be a
taxable transaction under applicable state, local, foreign or other tax laws.
The federal income tax consequences to a stockholder may vary depending upon the
stockholder's particular facts and circumstances.
Treatment as a Sale or Exchange. Under Section 302 of the Internal Revenue
Code of 1986, as amended (the "Code"), a transfer of Shares to the Company
pursuant to the Offer will, as a general rule, be treated as a sale or exchange
of the Shares if the receipt of cash upon the sale (a) is "substantially
18
<PAGE> 26
disproportionate" with respect to the stockholder, (b) results in a "complete
redemption" of the stockholder's interest in the Company, or (c) is "not
essentially equivalent to a dividend" with respect to the stockholder. These
tests (the "Section 302 tests") are explained more fully below.
If any of the Section 302 tests is satisfied, a tendering stockholder will
recognize gain or loss equal to the difference between the amount of cash
received by the stockholder pursuant to the Offer (less any portion thereof
attributable to accrued but unpaid dividends which is taxable as a dividend) and
the stockholder's basis in the Shares sold pursuant to the Offer. If the Shares
are held as capital assets, the gain or loss will be capital gain or loss, which
will be long-term capital gain or loss if the Shares have been held for more
than one year.
Treatment as a Dividend. If none of the Section 302 tests are satisfied
and, as anticipated, the Company has sufficient earnings and profits, a
tendering stockholder will be treated as having received a dividend taxable as
ordinary income in an amount equal to the entire amount of cash received by the
stockholder pursuant to the Offer. This amount will not be reduced by the
stockholder's basis in the Shares sold pursuant to the Offer, and (except as
described below for corporate stockholders eligible for the dividends-received
deduction) the stockholder's basis in those Shares will be added to the
stockholder's basis in his or her remaining Shares. No assurance can be given
that any of the Section 302 tests will be satisfied as to any particular
stockholder, and thus no assurance can be given that any particular stockholder
will not be treated as having received a dividend taxable as ordinary income.
Constructive Ownership of Stock. In determining whether any of the Section
302 tests is satisfied, a stockholder must take into account not only Shares
actually owned by the stockholder, but also Shares that are constructively owned
within the meaning of Section 318 of the Code. Under Section 318, a stockholder
may constructively own Shares actually owned, and in some cases constructively
owned, by certain related individuals and certain entities in which the
stockholder has an interest, as well as any Shares the stockholder has a right
to acquire by exercise of an option or by the conversion or exchange of a
security.
The Section 302 Tests. One of the following tests must be satisfied in
order for the sale of Shares pursuant to the Offer to be treated as a sale or
exchange rather than as a dividend distribution.
(a) Substantially Disproportionate Test. The receipt of cash by a
stockholder will be substantially disproportionate with respect to the
stockholder if the percentage of the outstanding voting stock of the
Company actually and constructively owned by the stockholder immediately
following the sale of Shares pursuant to the Offer (treating Shares
purchased pursuant to the Offer as not outstanding) is less than 80% of the
percentage of the outstanding voting stock of the Company actually and
constructively owned by the stockholder immediately before the exchange
(treating Shares purchased to the Offer as outstanding). Stockholders
should consult their tax advisors concerning the application of the
substantially disproportionate test to their particular circumstances.
(b) Complete Redemption Test. The receipt of cash by a stockholder
will be a complete redemption of the stockholder's interest if either (i)
all of the Shares actually and constructively owned by the stockholder is
sold pursuant to the Offer, or (ii) all of the Shares actually owned by the
stockholder is sold pursuant to the Offer and the stockholder is eligible
to waive, and effectively waives, the attribution of all Shares
constructively owned by the stockholder in accordance with the procedures
described in Section 302(c)(2) of the Code.
(c) Not Essentially Equivalent To A Dividend Test. The receipt of
cash by a stockholder will not be essentially equivalent to a dividend if
the stockholder's exchange of Shares pursuant to the Offer results in a
meaningful reduction of the stockholder's proportionate interest in the
Company. Whether the receipt of cash by a stockholder will not be
essentially equivalent to a dividend will depend on the stockholder's
particular facts and circumstances. However, in certain circumstances, in
the case of a small minority stockholder, even a small reduction may
satisfy this test. For example, the IRS has indicated in a published ruling
that in the case of a small minority stockholder of a publicly held
corporation who exercises no control over corporate affairs, a reduction in
the stockholder's proportionate interest in the corporation from .0001118%
to .0001081% (which represented only a 3.3% reduction in the
19
<PAGE> 27
stockholder's percentage ownership of outstanding shares for purposes of
the substantially disproportionate test) would constitute a meaningful
reduction. Stockholders expecting to rely on the "not essentially
equivalent to a dividend test" should consult their own tax advisors
regarding its application in their particular circumstances.
Under certain circumstances, it may be possible for a tendering stockholder
to satisfy one of the Section 302 tests by contemporaneously selling or
otherwise disposing of all or some of the Shares that are actually or
constructively owned by the stockholder but that are not purchased pursuant to
the Offer. Correspondingly, a stockholder may not be able to satisfy any of the
Section 302 tests because of contemporaneous acquisitions of Shares by the
stockholder or by a related party whose stock is constructively owned by the
stockholder. Stockholders should consult their tax advisors regarding the
consequences of such sales or acquisitions in their particular circumstances.
In the event that the Offer is oversubscribed, the Company's purchase of
Shares pursuant to the Offer will be prorated. Thus, even if all the Shares
actually and constructively owned by a stockholder are tendered pursuant to the
Offer, it is possible that not all of the Shares will be purchased by the
Company, which in turn may affect the stockholder's ability to satisfy one of
the Section 302 tests described above.
Special Rules for Corporate Stockholders. If the exchange of Shares by a
corporate stockholder does not satisfy any of the Section 302 tests and is
therefore treated as a dividend, such corporate stockholder may be entitled to a
dividends-received deduction equal to 70% of the dividend. There are a number of
limitations on the availability of the deduction, however, and the
dividends-received deduction may not be available or could be limited if, for
example, the corporation does not satisfy certain holding period requirements
with respect to the Shares or the Shares are treated as "debt financed portfolio
stock." Finally, it is expected that if a dividends-received deduction is
available, the dividend generally will constitute an extraordinary dividend
under Section 1059 of the Code. As a result, a corporate stockholder will be
required to reduce its tax basis in its Shares (but not below zero) by the
non-taxed portion of the dividend (that is, the portion of the dividend equal to
the dividends-received deduction). If the non-taxed portion of the dividend
exceeds the corporate stockholder's tax basis in its Shares, the excess must be
treated as gain from the sale of the Shares for the taxable year in which a sale
or disposition of the Shares occurs.
401(k) Plan. The exchange of Shares for cash by the 401(k) Plan, as
instructed by participants in such plan in accordance with the terms of such
plan, will not be a taxable transaction for federal income tax purposes for
either the 401(k) Plan or the plan participants. A subsequent distribution in
cash from the plan to a participant normally will be taxable in full as ordinary
income to the participant.
Backup Withholding. See Section 3 concerning the potential application of
federal backup withholding.
Foreign Stockholders. The Company generally will assume that a foreign
stockholder will be treated as having received a dividend and will therefore
withhold federal income tax at a rate equal to 30% of the gross proceeds paid to
a foreign stockholder or his or her agent pursuant to the Offer, unless the
Depositary determines that an exemption from or a reduced rate of withholding is
available pursuant to a tax treaty or that an exemption from withholding is
applicable because the gross proceeds are effectively connected with the conduct
of a trade or business by the foreign stockholder within the United States. A
foreign stockholder with respect to whom tax has been withheld may be eligible
to obtain a refund from the IRS of all or a portion of the withheld tax if the
stockholder satisfies one of the Section 302 tests for capital gain treatment or
is otherwise able to establish that no tax or a reduced amount of tax is due.
See Section 3 for more details concerning application of the withholding tax to
foreign stockholders. FOREIGN STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISERS REGARDING THE PARTICULAR TAX CONSEQUENCES TO SUCH STOCKHOLDER OF THE
DISPOSITION OF SHARES PURSUANT TO THE OFFER AND THE APPLICATION OF FEDERAL
INCOME TAX WITHHOLDING, INCLUDING ELIGIBILITY FOR A WITHHOLDING TAX REDUCTION OR
EXEMPTION AND THE REFUND PROCEDURE.
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<PAGE> 28
15. EXTENSION OF THE OFFER; TERMINATION; AMENDMENTS.
The Company expressly reserves the right, in its sole discretion, and
regardless of whether or not any of the conditions specified in Section 6 shall
have occurred, at any time or from time to time, to extend the period of time
during which the Offer is open by giving oral or written notice of such
extension to the Depositary, followed by a public announcement thereof no later
than 9:00 a.m. New York City time, on the next business day after the previously
scheduled Expiration Date. There can be no assurance that the Company will
exercise its right to extend the Offer for the Shares. During any such
extension, all Shares previously tendered and not withdrawn will remain subject
to the Offer.
The Company also expressly reserves the right, in its sole discretion, (a)
to delay payment for any Shares not theretofore paid for or to terminate the
Offer and not to accept for payment any Shares not theretofore accepted for
payment, upon the occurrence of any of the conditions specified in Section 6, or
(b) at any time or from time to time to amend the Offer in any respect,
including increasing or decreasing the number of Shares the Company may purchase
or the range of prices it may pay pursuant to the Offer. The Company confirms
that its reservation of the right to delay payment for Shares which it has
accepted for payment is limited by Rule 13e-4(f)(5) under the Exchange Act,
which requires that an issuer pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer.
Any such extension, delay, termination or amendment will be followed
promptly by a public announcement thereof. Any public announcement made pursuant
to the Offer will be disseminated promptly to stockholders in a manner
reasonably designed to inform stockholders of such change. Without limiting the
manner in which the Company may choose to make any public announcement, except
as provided by applicable law (including Rule 13e-4(e)(2) under the Exchange
Act), the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
If the Company makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Company will extend the Offer to the extent required by Rules
13e-4(d)(2) and 13e-4(e)(2) under the Exchange Act, which require that the
minimum period during which an offer must remain open following material changes
in the terms of the Offer or information concerning the Offer (other than a
change in price or a change in percentage of securities sought) will depend upon
the facts and circumstances, including the relative materiality of such terms or
information. The Company reserves the right, in its sole discretion, to purchase
additional Shares pursuant to the Offer. If (a) the Company increases or
decreases the price to be paid for the Shares, or the Company increases the
number of Shares being sought and such increase in the number of Shares being
sought exceeds 2% of the outstanding Shares or the Company decreases the number
of Shares being sought and (b) the Offer for the Shares is scheduled to expire
at any time earlier than the expiration of a period ending on the tenth business
day from, and including, the date that notice of such increase or decrease is
first published, sent or given, the Offer will be extended until the expiration
of such period of ten business days.
16. FEES AND EXPENSES.
Information Agent and Depositary. The Company has retained ChaseMellon
Shareholder Services, L.L.C. to act as Information Agent and as Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telegraph and personal interviews and may request
brokers, dealers and other nominee stockholders to forward materials relating to
the Offer to beneficial owners. For its services as Information Agent and
Depositary, ChaseMellon Shareholder Services, L.L.C. will receive reasonable and
customary compensation for its services, will be reimbursed for certain
reasonable out-of-pocket expenses and will be indemnified against certain
liabilities and expenses in connection with the Offer, including certain
liabilities under the Federal securities laws. ChaseMellon Shareholder Services,
L.L.C. has rendered stock transfer services to the Company in the past for which
it has received customary compensation, and can be expected to continue to
render similar services to the Company in the future. ChaseMellon Shareholder
Services, L.L.C. has not been retained to, nor is it authorized to, make
recommendations in connection with the Offer.
21
<PAGE> 29
The Company has also agreed to pay the reasonable fees and out-of-pocket
expenses of State Street Global Advisors to serve as agent to The Bank of New
York, the trustee under the Company's 401(k) Plan. In connection with the Offer,
State Street Global Advisors will receive investment instructions from the
401(k) Plan participants and will communicate such instructions to The Bank of
New York for tender of certain of the Shares allocated to the 401(k) Plan,
subject to the terms of such plan and applicable provisions of ERISA.
The Company will not pay any fees or commissions to any broker or dealer or
any other person (other than the Information Agent, the Depositary and State
Street Global Advisors) for soliciting tenders of Shares pursuant to the Offer.
Brokers, dealers, commercial banks, and trust companies will, upon request, be
reimbursed by the Company for reasonable and necessary costs and expenses
incurred by them in forwarding materials to their customers.
17. MISCELLANEOUS.
The Company will not accept tenders by or on behalf of holders of Shares in
any jurisdiction, foreign or domestic, in which the acceptance thereof would not
be in compliance with the laws of such jurisdiction. The Company is not aware of
any jurisdiction in which the making of the Offer or the acceptance for payment
of Shares in connection therewith would not be in compliance with the laws of
such jurisdiction. If the Company becomes aware of any jurisdiction where the
making of the Offer would not be in compliance with such laws, the Company will
make a good faith effort to comply with such laws or seek to have such laws
declared inapplicable to the Offer. If after such good faith effort the Company
cannot comply with any such laws, the Offer will not be made to, nor will
tenders be accepted from or on behalf of, holders of Shares in any such
jurisdictions. In those jurisdictions whose laws require that the Offer be made
by a licensed broker or dealer, the Offer shall be deemed to be made on behalf
of the Company by one or more registered brokers or dealers licensed under the
laws of such jurisdictions.
ASTEC INDUSTRIES, INC.
March 27, 1997
22
<PAGE> 30
Manually executed facsimile copies of the Letter of Transmittal will be
accepted from Eligible Institutions. The Letter of Transmittal and certificates
for Shares and any other required documents should be sent or delivered by each
tendering stockholder or his or her broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addresses set forth
below.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C>
By Mail: By Hand:
Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway -- 13th
South Hackensack, NJ 07606 floor
New York, NY 10271
By Facsimile Transmission: By Overnight Courier:
201-329-8936 Reorganization Department
Confirm Receipt of Notice 120 Broadway -- 13th
of Guaranteed Delivery: floor
201-296-4209 (or) New York, NY 10271
201-296-4381
</TABLE>
Any questions or requests for assistance or additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be
directed to the Information Agent. Stockholders may also contact their broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
450 West 33rd Street
New York, NY 10001
or
CALL TOLL-FREE (888) 224-2734
<PAGE> 31
LETTER OF TRANSMITTAL
TO ACCOMPANY SHARES OF ASTEC INDUSTRIES, INC. COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
THIS OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS
EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON THURSDAY, MAY 1, 1997,
UNLESS THE OFFER IS EXTENDED.
TO: CHASEMELLON SHAREHOLDER SERVICES, L.L.C., DEPOSITARY
<TABLE>
<S> <C>
By Mail: By Hand:
Reorganization Department Reorganization Department
P. O. Box 3301 120 Broadway -- 13th floor
South Hackensack, NJ 07606 New York, NY 10271
By Facsimile Transmission: By Overnight Courier:
201-329-8936 Reorganization Department
Confirm Receipt of Notice of 120 Broadway -- 13th floor
Guaranteed Delivery: New York, NY 10271
201-296-4209 (or) 201-296-4381
</TABLE>
Any questions or requests for assistance or additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent. Stockholders may also
contact their broker, dealer, commercial bank, trust company or other
nominee for assistance concerning the Offer.
---------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN ONE OF THOSE SHOWN
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE OF
THOSE LISTED ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO BOOK
ENTRY TRANSFER FACILITIES WILL NOT CONSTITUTE VALID DELIVERY TO THIS DEPOSITARY.
This Letter of Transmittal is to be used only if (a) certificates for
Shares (as defined below) are to be forwarded with it; or (b) a tender of Shares
is to be made by book-entry transfer to the account maintained by the Depositary
at The Depository Trust Company ("DTC"), or the Philadelphia Depository Trust
Company ("PDTC" and together with DTC the "Book-Entry Transfer Facilities")
pursuant to Section 3 of the Offer to Purchase. Stockholders who desire to
tender Shares pursuant to the Offer and who cannot deliver their Common Stock
certificates (or who are unable to comply with the procedures for book-entry
transfer on a timely basis) and all other documents required by this Letter of
Transmittal to the Depositary at or before the Expiration Date (as defined in
the Offer to Purchase) may tender their Shares according to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase. See
Instruction 2. Delivery of documents to one of the Book-Entry Transfer
Facilities does not constitute delivery to the Depositary.
<PAGE> 32
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED(SEE INSTRUCTIONS 3 AND 4)
- ---------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN EXACTLY AS NAME(S) APPEAR ON CERTIFICATE(S) TENDERED
CERTIFICATES) (ATTACH SIGNED LIST IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
TOTAL SHARES
TENDERED
- ---------------------------------------------------------------------------------------------------------------------
Indicate in this box the order (by certificate number) in which Shares are to be purchased in the event of
proration. (Attach additional signed list if necessary);*** See Instruction 9.
1ST: ; 2ND: ; 3RD: ; 4TH: ; 5TH:
- ---------------------------------------------------------------------------------------------------------------------
* Need not be completed if shares are delivered by book-entry transfer.
** If you desire to tender fewer than all Shares evidenced by any certificates listed above, please indicate in
this column the number of Shares you wish to tender. If you fail to indicate the number of Shares tendered, all
Shares evidenced by such certificates will be deemed to have been tendered. See Instruction 4.
*** If you do not designate an order, in the event less than all Shares tendered are purchased due to proration,
Shares will be selected for purchase by the Depositary.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH ONE OF THE BOOK-ENTRY
TRANSFER FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
-----------------------------------------------------------------------------
Account Number:
-----------------------------------------------------------------------------
Transaction Code Number:
-----------------------------------------------------------------------------
[ ] CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-------------------------------------------------------------------
Name of Institution that Guaranteed Delivery:
--------------------------------------------------------------------------
Window ticket number (if available):
------------------------------------------------------------------------------
If Delivery if by Book-Entry Transfer, Check Box of Applicable Book-Entry
Transfer Facility:
DTC [ ] PDTC [ ]
Account Number:
------------------------------------------------------------------------------
Transaction Code Number:
------------------------------------------------------------------------------
2
<PAGE> 33
TO CHASEMELLON SHAREHOLDER SERVICES, L.L.C.:
The undersigned hereby tenders to Astec Industries, Inc., a Tennessee
corporation (the "Company"), the above-described shares of the Company's Common
Stock, par value $0.20 per share (the "Shares" or the "Common Stock") (including
the associated preferred stock purchase rights (the "Rights") issued pursuant to
the Shareholder Protection Rights Agreement), at the price per Share indicated
in this Letter of Transmittal, net to the Seller in cash, upon the terms and
subject to the conditions set forth in the Company's Offer to Purchase, dated
March 27, 1997 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which together constitute the
"Offer"). Absent circumstances causing the Rights to become exercisable or
separately tradeable prior to the Expiration Date (as defined in the Offer to
Purchase), the tender of any Shares pursuant to the Offer will include the
tender of associated Rights. Unless the context otherwise requires, all
references to Shares shall include the associated Rights.
Subject to and effective upon acceptance for payment of the Shares tendered
hereby in accordance with the terms of the Offer (including, if the Offer is
extended or amended, the terms or conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Company all right, title and interest in and to all Shares tendered
hereby and orders the registration of such Shares if tendered by book-entry
transfer that are purchased pursuant to the Offer to or upon the order of the
Company and hereby irrevocably constitutes and appoints the Depositary as the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares, with full power of substitution (such power of attorney being an
irrevocable power coupled with an interest), to:
(a) deliver certificates for Shares or transfer ownership of such
Shares on the account books maintained by a Book-Entry Transfer Facility,
together in either such case with all accompanying evidence of transfer and
authenticity, to or upon the order of the Company, upon receipt by the
Depositary, as the undersigned's agent, of the Purchase Price (as defined
below) with respect to such Shares;
(b) present certificates for such Shares for cancellation and transfer
on the Company's books; and
(c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, subject to the next paragraph, all in
accordance with the terms of the Offer.
The undersigned hereby represents and warrants to the Company that:
(a) the undersigned understands that tenders of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and
in the Instructions hereto will constitute the undersigned's acceptance of
the terms and conditions of the Offer; including the undersigned's
representation and warranty that (i) the undersigned has a net long
position in Shares or equivalent securities at least equal to the Shares
tendered within the meaning of Rule 14e-4 under the Securities Exchange Act
of 1934, as amended, and (ii) such tender of Shares complies with Rule
14e-4;
(b) when and to the extent the Company accepts the Shares for
purchase, the Company will acquire good, marketable and unencumbered title
to them, free and clear of all security interests, liens, charges,
encumbrances, conditional sales agreements or other obligations relating to
their sale or transfer, and not subject to any adverse claim;
(c) on request, the undersigned will execute and deliver any
additional documents the Depositary or the Company deems necessary or
desirable to complete the assignment, transfer and purchase of the Shares
tendered hereby; and
(d) the undersigned has read, understands and agrees with, all of the
terms of the Offer.
With respect to holders of certificates representing Shares tendered
hereby, the names and addresses of the registered holders should be printed, if
they are not already printed above, exactly as they appear on the certificates
representing Shares tendered hereby. The certificate numbers, the number of
Shares represented by such certificates, and the number of Shares that the
undersigned wishes to tender, should be set forth in the
3
<PAGE> 34
appropriate boxes above. The price at which such Shares are being tendered
should be indicated in the box below.
The undersigned understands that, provided a minimum of 250,000 Shares are
properly tendered and not withdrawn, the Company will, upon the terms and
subject to the conditions of the Offer, determine a single price per Share, not
greater than $10.50 nor less than $9.50, net to the seller in cash (the
"Purchase Price"), that it will pay for Shares properly tendered and not
withdrawn pursuant to the Offer, taking into account the number of Shares so
tendered and the prices specified by stockholders tendering Shares. The
undersigned understands that the Company will select the lowest Purchase Price
that will allow it to purchase 2,000,000 Shares (or such lesser number of Shares
as are properly tendered and not withdrawn) at a price not greater than $10.50
nor less than $9.50 per Share pursuant to the Offer. The undersigned understands
that all Shares properly tendered at prices at or below the Purchase Price and
not withdrawn prior to the Expiration Date will be purchased at the Purchase
Price, upon the terms and subject to the conditions of the Offer, including the
proration terms, minimum tender and odd lot tender provisions, and that the
Company will return all other Shares, including Shares tendered and not
withdrawn at prices greater than the Purchase Price and Shares not purchased
because of proration. The undersigned understands that the Company will not pay
any separate consideration for the Rights associated with such Shares.
The undersigned recognizes that under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may accept for payment fewer than all of the Shares tendered hereby. In either
event, the undersigned understands that certificate(s) for any Shares not
tendered or not purchased will be returned to the undersigned at the address
indicated above, unless otherwise indicated under the "Special Payment
Instructions" or "Special Delivery Instructions" below. The undersigned
recognizes that the Company has no obligation, pursuant to the Special Payment
Instructions, to transfer any certificate for Shares from the name of their
registered holder, or to order the registration or transfer of such Shares
tendered by book-entry transfer, if the Company purchases none of the Shares
represented by such certificate or tendered by such book-entry transfer.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
The check for the aggregate Purchase Price for such of the tendered Shares
as are purchased will be issued to the order of the undersigned and mailed to
the address indicated above unless otherwise indicated under the Special Payment
Instructions or the Special Delivery Instructions below.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligations of the undersigned under this Letter of Transmittal shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
4
<PAGE> 35
NOTE: SIGNATURE MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
PRICE (IN DOLLARS) PER SHARE OF COMMON STOCK AT
WHICH SHARES OF COMMON STOCK ARE BEING TENDERED
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED,
OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES OF COMMON STOCK.
SHARES TENDERED AT PRICE
DETERMINED BY STOCKHOLDER
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
[ ] $9.500 [ ] $9.875 [ ] $10.250
[ ] $9.625 [ ] $10.000 [ ] $10.375
[ ] $9.750 [ ] $10.125 [ ] $10.500
</TABLE>
- --------------------------------------------------------------------------------
IF PORTIONS OF SHARE HOLDINGS ARE BEING TENDERED AT MORE THAN ONE PRICE, USE A
SEPARATE LETTER OF TRANSMITTAL FOR EACH PRICE SPECIFIED.
(SEE INSTRUCTION 5)
- --------------------------------------------------------------------------------
ODD LOTS
(SEE INSTRUCTION 8)
To be completed ONLY if Shares are being tendered by or on behalf of a
Person owning beneficially, as of the Expiration Date (as defined in Section 1
of the Offer to Purchase), an aggregate of fewer than 100 shares of Common
Stock, including Shares beneficially owned by such Person in the Company's
401(k) Plan.
THE UNDERSIGNED EITHER (CHECK ONE BOX):
[ ] will be the beneficial or record owner as of the Expiration Date of an
aggregate of fewer than 100 Shares of Common Stock, including Shares
beneficially owned by such Person in the Company's 401(k) Plan, or
[ ] is a broker, dealer, commercial bank, trust company or other nominee that:
(a) is tendering, for the beneficial owners thereof, Shares with respect to
which it is the record owner, and
(b) believes, based upon representations made to it by such beneficial
owners, that each such Person will be the beneficial owner as of the
Expiration Date of an aggregate of fewer than 100 Shares, including
Shares beneficially owned by such Person in the Company's 401(k) Plan.
In addition, the undersigned is tendering Shares either (check one box):
[ ] at the Purchase Price (defined below), as the same shall be determined by
the Company in accordance with the terms of the Offer (persons checking this
box need not indicate the price per Share below); or
[ ] at the price per Share indicated below under "Price (in Dollars) Per Share
of Common stock at Which Shares of Common Stock Are Being Tendered" in this
Letter of Transmittal.
5
<PAGE> 36
---------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6, 7 AND 10)
To be completed ONLY if certificate(s) for Shares not tendered or not
purchased and/or any check for the Purchase Price of Shares purchased are
to be issued in the name of someone other than the undersigned, or if
Shares delivered by book-entry transfer that are not purchased are to be
returned by credit to an account maintained by a Book-Entry Transfer
Facility.
Issue [ ] Check [ ] Certificate(s) to:
Name: -------------------------------------------------------
(PLEASE PRINT)
Address: -----------------------------------------------------
---------------------------------------------------------------
(INCLUDE ZIP CODE)
---------------------------------------------------------------
(TAX IDENTIFICATION OR
SOCIAL SECURITY NUMBER)
[ ] Credit Shares tendered by book-entry transfer and not purchased to the
account set forth below:
Name of account party: -------------------------------------
Account number: -------------------------------------------
Check box of Applicable Book-Entry Transfer Facility:
[ ] DTC [ ] PDTC
===============================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6, 7 AND 10)
To be completed ONLY if certificate(s) for Shares not tendered or not
purchased and/or any check for the Purchase Price of Shares purchased are
to be sent to someone other than the undersigned or to the undersigned at
an address other than that shown above.
Deliver [ ] Check [ ] Certificate(s) to:
Name: -------------------------------------------------------
(PLEASE PRINT)
Address: -----------------------------------------------------
---------------------------------------------------------------
(INCLUDE ZIP CODE)
6
<PAGE> 37
- --------------------------------------------------------------------------------
STOCKHOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 1 AND 6)
Must be signed by the registered holder(s) exactly as name(s)
appear(s) on certificate(s) or on a security position listing or by
person(s) authorized to become registered holder(s) by certificate(s) and
documents transmitted with this Letter of Transmittal. If signature is by
attorney in fact, executor, administrator, trustee, guardian, officer of a
corporation or another acting in a fiduciary or representative capacity,
please set forth the full title. See Instruction 6.
X
--------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
X
--------------------------------------------------------------------------
(PLEASE PRINT)
Name(s):
--------------------------------------------------------------------------
Capacity (full title):
--------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Area Code and Telephone Number:
--------------------------------------------------------------------------
Tax ID Number or Social Security Number:
------------------------------------------------------------------
Dated:
------------------------------------, 1997
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 6)
Authorized Signature:
--------------------------------------------------------------------------
Name(s):
--------------------------------------------------------------------------
(PLEASE PRINT)
Title:
--------------------------------------------------------------------------
Name of Firm:
--------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------
(INCLUDING ZIP CODE)
Area Code and Telephone Number:
---------------------------------------------------------------------------
Tax ID Number or Social Security Number:
------------------------------------------------------------------
Dated:
------------------------------------, 1997
- --------------------------------------------------------------------------------
(PLEASE COMPLETE THE FOLLOWING SUBSTITUTE FORM W-9)
7
<PAGE> 38
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C., AS DEPOSITARY
<TABLE>
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Social Security
Numbers
or
Employer
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY Identification
SIGNING AND DATING BELOW Number(s)
---------------------
------------------------------------------------------------
PART 2 -- CERTIFICATES -- Under penalties of perjury, I
DEPARTMENT OF THE TREASURY certify that:
INTERNAL REVENUE SERVICE
(1) The number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to be
issued to me); and
(2) I am not subject to backup withholding because either
(a) I am exempt from backup withholding, (b) I have not
been notified by the Internal Revenue Service (the
PAYER'S REQUEST FOR TAXPAYER "IRS") that I am subject to backup withholding as a
IDENTIFICATION NUMBER ("TIN") result of a failure to report all interests or
dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding.
------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that
you are currently subject to backup withholding because of under-reporting interest or dividends on your tax
return. However, if after being notified by the IRS that you were subject to backup withholding you received
another notification from the IRS that you are no longer subject to backup withholding, do not cross out
such item (2).
SIGNATURE: DATE: , 1997 PART 3 _______________
NAME:
ADDRESS: AWAITING TIN [ ]
(CITY, STATE AND ZIP CODE)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT
TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service, or Social Security Administration Office, or (2) I intend to mail or
deliver an application in the near future. I understand that if I do not provide
a taxpayer identification number by the time of payment, 31% of all reportable
payments made to me will be withheld.
<TABLE>
<S> <C>
Signature: Date: , 1997
</TABLE>
FACSIMILE COPIES OF THE LETTER OF TRANSMITTAL WILL BE ACCEPTED FROM ELIGIBLE
INSTITUTIONS. THE LETTER OF TRANSMITTAL AND CERTIFICATES FOR SHARES AND ANY
OTHER REQUIRED DOCUMENTS SHOULD BE SENT OR DELIVERED BY EACH TENDERING
STOCKHOLDER OR HIS OR HER BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR
OTHER NOMINEE TO THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH BELOW.
8
<PAGE> 39
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES.
No signature guarantee is required if either:
(a) this Letter of Transmittal is signed by the registered holder of
the Shares (which term, for purposes of this document, shall include any
participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) exactly as the name of
the registered holder appears on the certificate tendered with this Letter
of Transmittal and payment and delivery are to be made directly to such
owner unless such owner has completed either the box entitled "Special
Payments Instructions" or "Special Delivery Instructions" above; or
(b) such Shares are tendered for account of a member firm of a
registered national securities exchange, a member of the Stock Transfer
Association's approved medallion program (such as STAMP, SEMP or MSP) or a
commercial bank or trust company (not a savings bank or savings and loan
association) having an office, branch or agency in the United States (each
such entity, an "Eligible Institution").
In all other cases, an Eligible Institution must guarantee all signatures
on this Letter of Transmittal. See Instruction 6.
2. DELIVER OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES.
This Letter of Transmittal is to be used only if certificates are delivered
with it to the Depositary (or such certificates will be delivered pursuant to a
Notice of Guaranteed Delivery previously sent to the Depositary) or if tenders
are to be made pursuant to the procedures for tender by book-entry transfer set
forth in Section 3 of the Offer to Purchase. Certificates for all physically
tendered Shares or confirmation of a book-entry transfer into the Depositary's
account at a Book-Entry Transfer Facility of Shares tendered electronically,
together in each case with a properly and duly executed Letter of Transmittal,
should be mailed or delivered to the Depositary at the appropriate address set
forth in this Letter of Transmittal and must be delivered to the Depositary on
or before the Expiration Date (as defined in the Offer to Purchase). Delivery of
documents to one of the Book-Entry Transfer Facilities does not constitute
delivery to the Depositary.
Holders of Shares whose certificates are not immediately available or who
cannot deliver certificates for their Shares and all other required documents to
the Depositary before the Expiration Date, or whose Shares cannot be delivered
on a timely basis pursuant to the procedures for book-entry transfer, must, in
any such case, tender their Shares by or through any Eligible Institution by
properly completing and by duly executing and delivering a Notice of Guaranteed
Delivery (or facsimile of it) and by otherwise complying with the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to
such procedure, the certificate for all physically tendered Shares or book-entry
confirmation, as the case may be, as well as a properly completed and duly
executed Letter of Transmittal (or manually executed facsimile) and all other
documents required by this Letter of Transmittal, must be received by the
Depositary within three trading days after receipt by the Depositary of such
Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer to
Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
signature guarantee by an Eligible Institution in the form set forth in such
Notice. For Shares to be validly tendered pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed Delivery on or
before the Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
9
<PAGE> 40
The Company will not accept any alternative or contingent tenders, nor will
it purchase any fractional Shares, except as expressly provided in the Offer to
Purchase. All tendering stockholders, by execution of this Letter of Transmittal
(or a photocopy of it), waive any right to receive any notice of the acceptance
of the tender.
3. INADEQUATE SPACE.
If the space provided in the box contained "Description of Shares of
Tendered" is inadequate, the certificate numbers and/or number of Shares should
be listed on a separate signed schedule and attached to this Letter of
Transmittal.
4. PARTIAL TENDERS AND UNPURCHASED SHARES.
(Not applicable to stockholders who tender by book-entry transfer). If
fewer than all of the Shares evidenced by any certificate are to be tendered,
fill in the number of Shares which are to be tendered in the column entitled
"Number of Shares Tendered" in the box captioned "Description of Shares
Tendered." In such case, if any tendered Shares are purchased, a new certificate
for the remainder of the Shares (including, any Shares not purchased) evidenced
by the old certificate(s) will be issued and sent to the registered holder(s),
unless otherwise specified in either the "Special Payment Instructions" or
"Special Delivery Instructions" box on this Letter of Transmittal, as soon as
practicable after the Expiration Date. Unless otherwise indicated, all Shares
represented by the certificates listed and delivered to the Depositary will be
deemed to have been tendered.
5. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED.
For Shares to be properly tendered, the stockholder MUST check the box
indicating the price per share at which he or she is tendering Shares under
"Price (In Dollars) Per Share of Common Stock at Which Shares of Common Stock
Are Being Tendered" on this Letter of Transmittal, provided however, than an Odd
Lot Owner (as defined in Instruction 8) may check the box above in the section
entitled "Odd Lots" indicating that he or she is tendering all of his or her
Shares at the Purchase Price. ONLY ONE BOX MAY BE CHECKED. IF MORE THAN ONE BOX
IS CHECKED OR IF NO BOX IS CHECKED, THERE IS NO PROPER TENDER OF SHARES. A
stockholder wishing to tender portions of Share holdings at different prices
must complete a separate Letter of Transmittal for each price at which he or she
wishes to tender each such portion of his or her Shares. The same Shares cannot
be tendered (unless previously properly withdrawn as provided in Section 4 of
the Offer to Purchase) at more than one price.
6. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS.
(a) If this Letter of Transmittal is signed by the registered holder(s) of
the Shares tendered by this Letter of Transmittal, the signature(s) must
correspond exactly with the name(s) as written on the face of the certificate(s)
without any change whatsoever.
(b) If the Shares are registered in the names of two or more joint holders,
each such holder must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal (or facsimiles of it) as there are different
registrations of certificates.
(d) When this Letter of Transmittal is signed by the registered holder(s)
of the Shares listed and transmitted hereby, no endorsement(s) or certificate(s)
representing such Shares or separate stock powers are required unless payment is
to be made, or the certificate(s) for Shares not tendered or not purchased are
to be issued to a person other than the registered holder(s). SIGNATURE(S) ON
SUCH CERTIFICATES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION. If this Letter
of Transmittal is signed by any person other than the registered holder(s) of
the certificate(s) listed, the certificate(s) must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered
10
<PAGE> 41
holder(s) appear on the certificate(s), and the signature(s) or such
certificate(s) or stock power(s) must be guaranteed by an Eligible Institution.
See Instruction 1.
(e) If this Letter of Transmittal or any certificate(s) or stock power(s)
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such person(s) should so indicate when signing and must submit proper
evidence satisfactory to the Company of their authority to so act.
7. STOCK TRANSFER TAXES.
Except as provided in this Instruction 7, no stock transfer tax stamps or
funds to cover such stamps need accompany this Letter of Transmittal. The
Company will pay or cause to be paid any stock transfer taxes payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however:
(a) payment of the aggregate Purchase Price for Shares tendered hereby
and accepted for purchase is to be made to any person other than the
registered holder(s);
(b) Shares not tendered or not accepted for purchase are to be
registered in the name(s) of any person(s) other than the registered
holder(s); or
(c) tendered certificates are registered in the name(s) of any
person(s) other than the person(s) signing the Letter of Transmittal;
then the Depositary will deduct from the Purchase Price the amount of any
stock transfer taxes (whether imposed on the registered holder, such other
person or otherwise) payable on account of the transfer to such person unless
satisfactory evidence of the payment of such taxes or an exemption from them is
submitted.
8. ODD LOTS.
As described in Section 1 of the Offer to Purchase, if the Company is to
purchase fewer than all Shares tendered before the Expiration Date and not
withdrawn, the Shares purchased first will consist of all Shares tendered by or
on behalf of stockholders ("Odd Lot Owners") who beneficially hold, as of the
Expiration Date, an aggregate of fewer than 100 Shares, including Shares
beneficially owned by such Person in the Company's 401(k) Plan, and who tender
all such Shares at or below the Purchase Price. This preference will not be
available unless the box captioned "Odd Lots" is completed.
9. ORDER OF PURCHASE IN EVENT OF PRORATION.
As described in Section 1 of the Offer to Purchase, stockholders may
designate the order in which their Shares are to be purchased in the event of
proration. If a stockholder is entitled to capital gain or loss treatment as
described in Section 14 of the Offer to Purchase, the order of purchase may have
an effect on the amount of any taxable gain or loss on the Shares purchased,
depending on the stockholder's basis in the Shares. See Sections 1 and 14 of the
Offer to Purchase.
10. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS.
If certificate(s) for Shares not tendered or not purchased and/or check(s)
are to be issued in the name of a person other than the signer of the Letter of
Transmittal or if such certificate(s) and/or check(s) are to be sent to someone
other than the person signing the Letter of Transmittal or to the signer at a
different address, the boxes captioned "Special Payment Instructions" and/or
"Special Delivery Instructions" on this Letter of Transmittal should be
completed as applicable and signatures must be guaranteed as described in
Instruction 1. Stockholders tendering Shares by book-entry transfer may request
that Shares not purchased be credited to such account maintained at a Book-Entry
Transfer Facility as such stockholder may designate under "Special Payment
Instructions." If no such instructions are given, such Shares not purchased will
be returned by crediting the account at the Book-Entry Transfer Facility
designated above.
11
<PAGE> 42
11. IRREGULARITIES.
All questions as to the number of Shares to be accepted, the price to be
paid for the Shares and the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tender of Shares will be determined
by the Company in its sole discretion, which determination shall be final and
binding on all parties. The Company reserves the absolute right to reject any or
all tenders of Shares it determines not to be in proper form or the acceptance
of which or payment for which may, in the opinion of the Company's counsel, be
unlawful. The Company also reserves the absolute right to waive any of the
conditions of the Offer and any defect or irregularity in the tender of any
particular Shares, and the Company's interpretation of the terms of the Offer
(including these instructions) will be final and binding on all parties. No
tender of Shares will be deemed to be properly made until all defects and
irregularities have been cured or waived. Unless waived, any defects or
irregularities in connection with tenders must be cured within such time as the
Company shall determine. None of the Company, the Depositary, the Information
Agent (as defined in the Offer to Purchase) or any other Person is or will be
obligated to give notice to any defects or irregularities in tenders and none of
them will incur any liability for failure to give any such notice.
12. QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES.
Questions and requests for assistance may be directed to, or additional
copies of the Offer to Purchase, the Notice of Guaranteed Delivery and this
Letter of Transmittal may be obtained from, the Information Agent at its
addresses and telephone numbers set forth at the end of this Letter of
Transmittal or from your broker, dealer, commercial bank or trust company.
13. SUBSTITUTE FORM W-9 AND FORM W-8.
Under U.S. Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
stockholder's correct taxpayer identification number ("TIN") on the foregoing
Substitute Form W-9. If the Depositary is not provided with the correct TIN, the
Internal Revenue Service may subject the stockholder or other payee to a $50
penalty. In addition, payments that are made to such stockholder or other payee
with respect to Shares purchased pursuant to the Offer may be subject to 31%
backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 may be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the stockholder or other payee. Backup withholding
is not an additional tax. Rather, the tax liability of person subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Depositary.
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which number to report.
12
<PAGE> 43
14. WITHHOLDING ON FOREIGN STOCKHOLDERS.
Even if a foreign stockholder has provided the required certification to
avoid back-up withholding, the Depositary will withhold federal income tax equal
to 30% of the gross proceeds payable to a foreign stockholder or his agent
unless the Depositary determines than an exemption from or a reduced rate of
withholding is available pursuant to a tax treaty or that an exemption from
withholding is applicable because such gross proceeds are effectively connected
with the conduct of a trade or business in the United States. For this purpose,
a foreign stockholder is any stockholder that is not (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof, or (iii) an estate or trust the income of which is subject to United
States, federal income taxation regardless of the source of such income. In
order to apply for a reduced rate of withholding pursuant to a tax treaty, a
foreign stockholder must deliver to the Depositary a properly completed Form
1001. In order to apply for exemption from withholding on the basis that the
gross proceeds are effectively connected with the conduct of a trade or business
in the United States, a foreign stockholder must deliver to the Depositary a
properly completed Form 4224. These forms can be obtained from the Depositary or
Information Agent. The Depositary will determine a stockholder's status as a
foreign stockholder and eligibility for a reduced rate of, or an exemption from,
withholding by reference to the stockholder's address and to any submitted
certificates or statements concerning eligibility for a reduced rate of, or
exemption from, withholding (e.g. Form 1001 or Form 4224), unless facts and
circumstances indicate that reliance is not warranted or applicable law requires
some other method for determining eligibility for determining whether a reduced
rate or withholding is applicable. A foreign stockholder with respect to whom
tax has been withheld may be eligible to obtain a refund of all or a portion of
the withheld tax if such stockholder meets one of the exceptions for capital
gain or loss treatment described in Section 14 of the Offer to Purchase or is
otherwise able to establish that no tax or a reduced amount of tax was due.
Backup withholding generally will not apply to amounts subject to the 30% or
treaty-reduced rate of withholding. Foreign stockholders are urged to consult
their tax advisors regarding the application of federal income tax withholding,
including eligibility for a withholding tax reduction or exemption and the
refund procedures.
13
<PAGE> 44
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C>
By Mail: By Hand:
Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway -- 13th floor
South Hackensack, NJ 07606 New York, NY 10271
By Facsimile Transmission: By Overnight Courier:
201-329-8936 Reorganization Department
Confirm Receipt of Notice of Guaranteed Delivery: 120 Broadway -- 13th floor
201-296-4209 (or) 201-296-4381 New York, NY 10271
</TABLE>
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent. Stockholders may also contact their
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
or
CALL TOLL-FREE (888) 224-2734
<PAGE> 45
NOTICE OF GUARANTEED DELIVERY
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF ASTEC INDUSTRIES, INC.
AS SET FORTH IN SECTION 3 OF THE OFFER TO PURCHASE THIS FORM OR A FACSIMILE
OF IT MUST BE USED TO ACCEPT THE OFFER (AS DEFINED BELOW) IF:
(a) certificates for Common Stock, par value $0.20 per share (the "Shares"
or "Common Stock") of Astec Industries, Inc., a Tennessee corporation
(the "Company"), are not immediately available; or
(b) the procedure for book-entry transfer cannot be completed on a timely
basis; or
(c) time will not permit the Letter of Transmittal or other required
documents to reach the Depositary referred to below before the
Expiration Date (as defined in Section 1 of the Offer to Purchase
referred to below).
This form or a facsimile of it, signed and properly completed may be
delivered by hand or transmitted by telegram, facsimile transmission or mail, to
the Depositary by the Expiration Date (as defined in the Offer to Purchase). See
Section 3 of the Offer to Purchase.
TO: FIRST UNION NATIONAL BANK OF NORTH CAROLINA DEPOSITARY
<TABLE>
<S> <C>
By Mail: By Hand:
Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway -- 13th Floor
South Hackensack, NJ 07606 New York, NY 10271
By Facsimile Transmission: By Overnight Courier:
(201) 329-8936 Reorganization Department
Confirm Receipt of Notice of 120 Broadway -- 13th Floor
Guaranteed Delivery New York, NY 10271
(201) 296-4209
(or)
(201) 296-4381
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN ONE OF THOSE SHOWN ABOVE,
OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE OF THOSE
LISTED ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THIS FORM IS NOT TO BE USED
TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED
TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO,
SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 46
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Astec Industries, Inc. a Tennessee
corporation, at the price per Share indicated below, net to the seller in cash,
upon the terms and subject to conditions set forth in the Company's Offer to
Purchase, dated March 27, 1997 (the "Offer to Purchase"), and the related Letter
of Transmittal (which together constitute the "Offer"), receipt of which is
hereby acknowledged, ________ Shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase.
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE OF COMMON STOCK AT
WHICH SHARES OF COMMON STOCK ARE BEING TENDERED
- --------------------------------------------------------------------------------
IF SHARES ARE BEING TENDERED AT MORE THAN ONE PRICE,
USE A SEPARATE NOTICE OF GUARANTEED DELIVERY FOR
EACH PRICE SPECIFIED
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX,
IF MORE THAN ONE BOX OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES OF COMMON STOCK
- --------------------------------------------------------------------------------
SHARES TENDERED AT PRICE
DETERMINED BY STOCKHOLDER
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
[ ] $9.500 [ ] $ 9.875 [ ] $10.250
[ ] $9.625 [ ] $10.000 [ ] $10.375
[ ] $9.750 [ ] $10.125 [ ] $10.500
</TABLE>
- --------------------------------------------------------------------------------
2
<PAGE> 47
ODD LOTS
(SEE INSTRUCTION 8 OF THE LETTER OF TRANSMITTAL)
To be completed ONLY if Shares are being tendered by or on behalf of a
Person owning beneficially, as of the Expiration Date, an aggregate of fewer
than 100 Shares, including Shares beneficially owned by such Person in the
Company's 401(k) Plan.
THE UNDERSIGNED EITHER (CHECK ONE BOX):
[ ] was the beneficial owner as of the Expiration Date of an aggregate of
fewer than 100 Shares, including Shares beneficially owned by such
Person in the Company's 401(k) Plan, all of which are being tendered;
or
[ ] is a broker, dealer, commercial bank, trust company or other nominee
that:
(a) is tendering, for the beneficial owners thereof, Shares with respect
to which it is the record owner, and
(b) believes, based upon representations made to it by such beneficial
owners, that each such Person was the beneficial owner as of the
Expiration Date of an aggregate of fewer than 100 Shares, including
Shares beneficially owned by such Person in the Company's 401(k)
Plan and is tendering all of such Shares.
In addition, the undersigned is tendering Shares either (check one box):
[ ] at the Purchase Price (as defined in the Offer), as the same shall be
determined by the Company in accordance with the terms of the Offer
(person checking this box need not indicate the price per Share above);
or
[ ] at the price per share of Common Stock indicated above under "Price (in
Dollars) Per Share of Common Stock at Which Shares of Common Stock Are
Being Tendered" on this Notice of Guaranteed Delivery.
Number of Shares:
- ------------------------------
Certificate Nos. (if available):
If Shares will be delivered by book-entry transfer:
Name of Tendering Institution:
Account No.
at:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
---------------------------------------------
SIGN HERE
<TABLE>
<S> <C>
- ----------------------------------------------------- -----------------------------------------------------
(Signature(s)) (Name(s)) (Please Print)
- ----------------------------------------------------- -----------------------------------------------------
(Signature(s)) (Name(s)) (Please Print)
- ----------------------------------------------------- -----------------------------------------------------
(Address) (Area Code and Telephone No.)
- ----------------------------------------------------- -----------------------------------------------------
(Address) (Zip Code)
</TABLE>
3
<PAGE> 48
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the Stock Transfer Association's approved medallion
program (such as STAMP, SEMP or MSP) or which is a commercial bank or trust
company having an office, branch or agency in the United States, guarantees (i)
that the above named person(s) own(s) the Shares tendered hereby within the
meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended,
(ii) that such tender of Shares complies with Rule 14e-4, and (iii) to deliver
to the Depositary, at one of its addresses set forth above, Share certificates
evidencing the Shares tendered hereby, in proper form for transfer, or
confirmation of book-entry transfer of such Shares into the Depositary's account
at the Depositary's account at The Depository Trust Company or the Philadelphia
Depository Trust Company; in each case with delivery of a Letter of Transmittal
(or facsimile thereof), properly completed and duly executed and any other
required documents, all within three NASDAQ trading days of the date hereof.
--------------------------------------
Name of Firm
--------------------------------------
Authorized Signature
--------------------------------------
Name
--------------------------------------
Title
--------------------------------------
Address
--------------------------------------
Zip Code
Dated: __________________________, 1997 --------------------------------------
(Area Code and Telephone No.)
4
<PAGE> 49
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
450 WEST 33RD STREET
NEW YORK, NEW YORK 10001
ASTEC INDUSTRIES, INC.
OFFER TO PURCHASE FOR CASH UP TO 2,000,000 SHARES OF ITS COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
AT A PURCHASE PRICE NOT GREATER THAN $10.50
NOR LESS THAN $9.50 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON MAY 1, 1997, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Astec Industries, Inc., a Tennessee corporation (the "Company"), has
appointed us to act as Information Agent in connection with its offer to
purchase up to 2,000,000 shares of its Common Stock, par value $0.20 per share
(the "Shares" or the "Common Stock") (including the associated preferred stock
purchase rights (the "Rights"), issued pursuant to the Shareholder Protection
Rights Agreement), to the Company at a price, not greater than $10.50 nor less
than $9.50 per Share, upon the terms and subject to the conditions set forth in
the Company's Offer to Purchase, dated March 27, 1997, and in the related Letter
of Transmittal (which together constitute the "Offer").
Provided 250,000 Shares are properly tendered and not withdrawn, the
Company will, upon the terms and subject to the conditions of the Offer,
determine a single price per Share, not greater than $10.50 nor less than $9.50
per Share, net to the seller in cash (the "Purchase Price"), that it will pay
for Shares properly tendered and not withdrawn pursuant to the Offer, taking
into account the number of Shares so tendered and the prices specified by
stockholders tendering Shares. The Company will select the lowest Purchase Price
that will allow it to buy 2,000,000 Shares (or such lesser number of Shares as
are properly tendered and not withdrawn) at a price not greater than $10.50 nor
less than $9.50 per Share pursuant to the Offer. No separate consideration will
be paid for the Rights. All Shares properly tendered and not withdrawn at prices
at or below the Purchase Price prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase) will be purchased at the Purchase Price,
upon the terms and subject to the conditions of the Offer, including the minimum
tender condition, proration terms and odd lot tender provisions. See Section 1
of the Offer to Purchase.
If, at the Expiration Date, more than 2,000,000 Shares (or such greater
number of Shares as the Company elects to purchase) are properly tendered and
not withdrawn at or below the Purchase Price, the Company will, upon the terms
and subject to the conditions of the Offer, accept Shares for purchase first
from Odd Lot Owners (as defined in Section 2 of the Offer to Purchase) whose
Shares were properly tendered at or below the Purchase Price (and not withdrawn)
and then on a pro rata basis from other stockholders whose Shares are properly
tendered at or below the Purchase Price (and not withdrawn). See Introduction
and Section 1 of the Offer to Purchase.
THE OFFER IS CONDITIONED ON A MINIMUM 250,000 OF SHARES BEING TENDERED. THE
OFFER IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6 OF THE OFFER TO
PURCHASE.
For your information and forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase, dated March 27, 1997;
2. Letter to Clients who are holders of Common Stock which may be sent
to your clients for whose accounts you hold Shares registered in your name
or in the name of your nominee, with space provided for obtaining such
clients' instructions with regard to the Offer;
3. Letter to stockholders of the Company, dated March 27, 1997, from
J. Don Brock, Chairman of the Board and Chief Executive Officer;
<PAGE> 50
4. Letter of Transmittal for your use and for the information of your
clients (together with accompanying Substitute Form W-9 and guidelines);
5. Notice of Guaranteed Delivery to be used to accept the Offer if the
Share certificates and all other required documents cannot be delivered to
the Depositary by the Expiration Date or if the procedure for book-entry
transfer cannot be completed on a timely basis; and
6. Return envelope addressed to ChaseMellon Shareholder Services,
L.L.C., as Depositary for the Shares.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER,
PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON MAY 1, 1997, UNLESS THE OFFER IS EXTENDED.
No fees or commissions will be payable to brokers, dealers or any person
for soliciting tenders of Shares pursuant to the Offer other than fees paid to
the Information Agent or the Depositary as described in Section 16 of the Offer
to Purchase. The Company will, however, upon request, reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to the beneficial owners of shares of Common Stock held by
you as a nominee or in a fiduciary capacity. The Company will pay or cause to be
paid any stock transfer taxes applicable to its purchase of Shares, except as
otherwise provided in Instruction 7 of the Letter of Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary with either certificate(s) representing the tendered Shares or
confirmation of the book-entry transfer of the tendered Shares, all in
accordance with the instructions set forth in the Letter of Transmittal and the
Offer to Purchase.
As described in Section 3 of the Offer to Purchase, tenders may be made
without the concurrent deposit of stock certificates or concurrent compliance
with the procedure for book-entry transfer if such tenders are made by or
through a broker or dealer which is a member firm of a registered national
securities exchange, a member of the Stock Transfer Association's approved
medallion program (such as STAMP, SEMP or MSP) or a commercial bank or trust
company having an office, branch or agency in the United States. Certificates
for Shares so tendered (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the "Book-Entry Transfer
Facilities" described in Section 3 of the Offer to Purchase), together with a
properly completed and duly executed Letter of Transmittal and any other
documents required by the Letter of Transmittal must be received by the
Depositary within three NASDAQ trading days after timely receipt by the
Depositary of a properly completed and duly executed Notice of Guaranteed
Delivery.
Any inquiries you may have with respect to the Offer should be addressed to
the Information Agent at its address and telephone number set forth on the back
cover page of the Offer to Purchase.
Additional copies of the enclosed material may be obtained without expense
from the Information Agent, ChaseMellon Shareholder Services, L.L.C., telephone:
(212) 273-8072 (collect) or 888-224-2734 (toll-free).
Very truly yours,
CHASEMELLON SHAREHOLDER SERVICES,
L.L.C.
Enclosures
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR ANY OF ITS AFFILIATES, THE
INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE
ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
2
<PAGE> 51
ASTEC INDUSTRIES, INC.
OFFER TO PURCHASE FOR CASH UP TO 2,000,000 SHARES
OF ITS COMMON STOCK AT A PURCHASE PRICE NOT
GREATER THAN $10.50 NOR LESS THAN $9.50 PER SHARE
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated March 27,
1997 and the related Letter of Transmittal (which together constitute the
"Offer") in connection with the Offer by Astec Industries, Inc., a Tennessee
corporation (the "Company"), to purchase up to 2,000,000 shares of its Common
Stock, par value $.20 per share (the "Shares" or the "Common Stock") (including
the associated preferred stock purchase rights (the "Rights") issued pursuant to
the Shareholder Protection Rights Agreement), to the Company at a price, not
greater than $10.50 nor less than $9.50 per Share, upon the terms and subject to
the conditions set forth in the Offer.
The Company will, upon the terms and subject to the conditions of the
Offer, determine a single price per Share, not greater than $10.50 nor less than
$9.50 per Share, net to the seller in cash (the "Purchase Price"), that it will
pay for the Shares properly tendered and not withdrawn pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
stockholders tendering Shares. The Company will select the lowest Purchase Price
that will allow it to buy 2,000,000 Shares (or such lesser number of Shares as
are properly tendered and not withdrawn) at a price not greater than $10.50 nor
less than $9.50 per Share pursuant to the Offer. No separate consideration will
be paid for the Rights. Subject to, among other conditions, a minimum of 250,000
Shares being properly tendered to the Company and not withdrawn, all Shares
properly tendered prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase) at prices at or below the Purchase Price and not withdrawn
will be purchased at the Purchase Price upon the terms and subject to the
conditions of the Offer, including the proration terms and odd lot tender
provisions described in the Offer to Purchase. The Company will return all other
Shares, including Shares tendered at prices greater than the Purchase Price and
Shares not purchased because of proration. See Section 1 of the Offer to
Purchase.
Upon the terms and subject to the conditions of the Offer, if at the
Expiration Date, more than 2,000,000 Shares (or such greater number of Shares as
the Company elects to purchase) are properly tendered and not withdrawn at or
below the Purchase Price, the Company will accept Shares for purchase first from
Odd Lot Owners (as defined in Section 2 of the Offer to Purchase) whose Shares
are properly tendered at or below the Purchase Price (and not withdrawn) and
then on a pro rata basis from all other stockholders whose Shares are properly
tendered at or below the Purchase Price (and not withdrawn). See Introduction
and Section 1 of the Offer to Purchase.
WE ARE THE OWNER OF RECORD OF SHARES OF COMMON STOCK HELD FOR YOUR ACCOUNT.
AS SUCH, WE ARE THE ONLY ONES WHO CAN TENDER YOUR SHARES OF COMMON STOCK, AND
THEN ONLY PURSUANT TO YOUR INSTRUCTIONS. WE ARE SENDING YOU THE LETTER OF
TRANSMITTAL FOR YOUR INFORMATION ONLY, YOU CANNOT USE IT TO TENDER SHARES OF
COMMON STOCK WE HOLD FOR YOUR ACCOUNT.
Please instruct us as to whether you wish us to tender any or all of the
Shares we hold for your account on the terms and subject to the conditions of
the Offer.
<PAGE> 52
We call your attention to the following:
1. You may tender Shares at prices not greater than $10.50 nor less
than $9.50 per Share, as indicated in the attached Instruction Form, net to
you in cash.
2. You may designate the priority in which your Shares shall be
purchased in the event of proration.
3. This Offer is conditioned on a minimum number of 250,000 Shares
being properly tendered and not withdrawn.
4. The Offer, proration period and withdrawal rights will expire at
5:00 p.m., New York City time, on May 1, 1997, unless the Company extends
the Offer.
5. The Offer is for 2,000,000 Shares, constituting approximately 20%
of the Company's outstanding Shares as of March 10, 1997.
6. Tendering stockholders will not be obligated to pay any brokerage
commissions, solicitation fees or, subject to Instruction 7 of the Letter
of Transmittal, stock transfer taxes on the Company's purchase of Shares
pursuant to the Offer.
7. If you beneficially hold, as of the Expiration Date, an aggregate
of fewer than 100 Shares, including any Shares beneficially owned by you in
the Company's 401(k) Plan and you instruct us to tender on your behalf all
such Shares at or below the Purchase price before the Expiration Date and
check the box captioned "Odd Lots" in the attached Instruction Form, the
Company, upon the terms and subject to the conditions of the Offer, will
accept all such Shares for purchase before proration, if any, of the
purchase of other Shares properly tendered at or below the Purchase Price.
8. If you wish to tender portions of your Shares at different prices
you must complete a separate Instruction Form for each price at which you
wish to tender each such portion of your Shares. We must submit separate
instructions on your behalf for each price you will accept.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the attached
Information Form. An envelope to return your Instruction Form to us is enclosed.
If you authorize us to tender your Shares, we will tender all such Shares unless
you specify otherwise on the attached Instruction Form.
YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION DATE OF THE OFFER.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, MAY 1, 1997, UNLESS THE COMPANY EXTENDS THE OFFER.
As described in Section 1 of the Offer to Purchase, if at the Expiration
Date more than 2,000,000 Shares (or such greater number of Shares as the Company
elects to purchase) are properly tendered and not withdrawn at or below the
Purchase Price, the Company will accept Shares for purchase at the Purchase
price in the following order of priority:
a. first, all Shares properly tendered at or below the Purchase Price
prior to the Expiration Date and not withdrawn) by any Odd Lot Owner as
defined in the offer to Purchase) who:
i. tenders all Shares beneficially owned by such Odd Lot Owner at
or below the Purchase Price (partial tenders will not qualify for this
preference); and
2
<PAGE> 53
ii. completes the section entitled Odd Lots on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
and
b. second, after purchase of all the foregoing Shares, all other
Shares properly tendered at or below the Purchase Price, before the
Expiration Date (and not withdrawn) on a pro rata basis, if necessary (with
adjustments to avoid purchases of fractional Shares).
The Company will not accept tenders by, or on behalf of, holders of Shares
in any jurisdiction in which the acceptance of the Offer would not comply with
the laws of such jurisdiction. In any jurisdiction in which the securities or
Blue Sky laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of the Company or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
3
<PAGE> 54
INSTRUCTION FORM WITH RESPECT TO THE
ASTEC INDUSTRIES, INC.
OFFER TO PURCHASE FOR CASH UP TO 2,000,000 SHARES
OF ITS COMMON STOCK AT A PURCHASE PRICE NOT
GREATER THAN $10.50 NOR LESS THAN $9.50 PER SHARE
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated March 27, 1997, and the related Letter of Transmittal
(which together constitute the "Offer") in connection with the Offer by Astec
Industries, Inc., a Tennessee corporation (the "Company"), to purchase up to
2,000,000 shares of its Common Stock, par value $.20 per share (the "Shares" or
the "Common Stock") (including the associated preferred stock purchase rights
(the "Rights") issued pursuant to the Shareholder Protection Rights Agreement),
by the Company at a price not greater than $10.50 nor less than $9.50 per Share,
upon the terms and subject to the conditions of the Offer. No separate
consideration will be paid for the Rights.
The undersigned understands that the Company will, upon the terms and
subject to the conditions of the Offer, determine a single price per Share, not
greater than $10.50 nor less than $9.50 per Share, net to the seller in cash
(the "Purchase Price"), that it will pay for the Shares properly tendered and
not withdrawn pursuant to the Offer, taking into account the number of Shares so
tendered and the prices specified by stockholders tendering Shares. The Company
will select the lowest Purchase Price that will allow it to buy 2,000,000 Shares
(or such lesser number of Shares as are properly tendered and not withdrawn) at
a price not greater than $10.50 nor less than $9.50 per Share pursuant to the
Offer. Subject to, among other conditions, a minimum of 250,000 Shares being
properly tendered to the Company and not withdrawn, all Shares properly tendered
at prices at or below the Purchase Price and not withdrawn will be purchased at
the Purchase Price, upon the terms and subject to the conditions of the Offer,
including the proration terms and odd lot tender provisions described in the
Offer to Purchase. The Company will return all other Shares, including Shares
tendered at prices greater than the Purchase price and Shares not purchased
because of proration. See Section 1 of the Offer to Purchase.
The undersigned hereby instruct(s) you to tender to the Company the number
of Shares indicated below held by you for the account of the undersigned, upon
the terms and subject to the conditions set forth in the Offer to Purchase and
the related Letter of Transmittal.
[ ] By checking this box, all Shares held by us for your account, including
fractional Shares, will be tendered. If fewer than all Shares are to be
tendered, please check the box and indicate the aggregate number of Shares
to be tendered by us.
---------------------- Shares*
ODD LOTS
(SEE INSTRUCTION 8 OF THE LETTER OF TRANSMITTAL)
[ ] By checking this box, the undersigned represents that the undersigned was
the beneficial or record owner on the Expiration Date (as defined in
Section 1 of the Offer to Purchase), of an aggregate of fewer than 100
Shares, including any Shares beneficially owned by the undersigned in the
Company's 401(k) Plan and is instructing the holder to tender all such
Shares.
In addition, the undersigned is tendered Shares either (check one box):
[ ] at the Purchase Price, as the same shall be determined by the Company in
accordance with the terms of the Offer (persons checking this box need not
indicate the price per Share below); or
[ ] at the price per Share indicated below under Price (in Dollars) Per Share
of Common Stock at which Shares of Common Stock Are Being Tendered on this
Instruction Form.
- ---------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
4
<PAGE> 55
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE OF COMMON STOCK AT
WHICH SHARES OF COMMON STOCK ARE BEING TENDERED
- --------------------------------------------------------------------------------
IF SHARES ARE BEING TENDERED AT MORE
THAN ONE PRICE, USE A SEPARATE INSTRUCTION FORM
FOR EACH PRICE SPECIFIED
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES OF COMMON STOCK
- --------------------------------------------------------------------------------
SHARES TENDERED AT PRICE
DETERMINED BY STOCKHOLDER
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
[ ] $9.500 [ ] $10.000 [ ] $10.500
[ ] $9.625 [ ] $10.125
[ ] $9.750 [ ] $10.250
[ ] $9.875 [ ] $10.375
</TABLE>
- --------------------------------------------------------------------------------
SIGNATURE BOX
Signature(s)
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Account Number
- --------------------------------------------------------------------------------
Area Code and telephone No.
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number
- --------------------------------------------------------------------------------
5
<PAGE> 56
[LOGO]
ASTEC INDUSTRIES, INC.
March 27, 1997
Dear Fellow Stockholders:
We are pleased to inform you that the Board of Directors of Astec
Industries, Inc. (the "Company") has approved an offer to purchase up to
2,000,000 shares of the Company's Common Stock, representing approximately 20%
of the Company's outstanding Common Stock as of March 10, 1997. This offer
provides stockholders with an opportunity to sell some or all of their shares
without the payment of any brokerage commissions or fees.
Under the terms of the offer, the price paid for your shares will be
between $9.50 and $10.50 per share. The Offer to Purchase is being made by means
of a so-called "Dutch Auction," which permits you to select the cash price
within the specified range at which you are willing to sell shares to the
Company. The Company will determine the lowest single purchase price within that
range that will enable it to buy 2,000,000 shares, assuming at least that many
shares have been properly tendered. The Company will then pay that price for all
shares properly tendered at or below that price, subject to possible proration.
Any shares tendered by you which the Company does not purchase will be returned
to you.
The Board of Directors believes that the purchase of shares is consistent
with our long-term goal of increasing stockholder value. The maximum aggregate
cost of the Share repurchase would be approximately $21,450,000, which includes
anticipated expenses of $450,000 to be incurred by the Company in connection
with this offering. The Company intends to increase the size of its existing
credit facility with The First National Bank of Chicago and to use such
additional borrowing capacity to finance the repurchase of the Shares.
Stockholders who own fewer than 100 shares should note that the offer
represents an opportunity for them to sell their shares without having to pay
brokerage commissions or odd lot discounts.
Neither the Company nor its Board of Directors is making any recommendation
to stockholders as to whether to tender or refrain from tendering shares. No
director or executive officer of the Company intends to tender any shares under
the offer.
Unless extended by the Company, the offer will expire at 5:00 p.m., New
York City time, on Thursday, May 1, 1997.
The offer is explained in detail in the enclosed Offer to Purchase and
related Letter of Transmittal. We encourage you to read these materials
carefully before making any decision with respect to the offer. Should you have
any questions regarding the offer or need assistance in tendering your shares,
please call ChaseMellon Shareholder Services, L.L.C., the Information Agent and
Depositary for the offer, toll free at 1-888-224-2734.
/s/ J. DON BROCK SIG
J. Don Brock
Chairman of the Board and
Chief Executive Officer
<PAGE> 57
IMMEDIATE ATTENTION REQUIRED
March 27, 1997
TO: PARTICIPANTS IN THE ASTEC INDUSTRIES, INC. 401(k) RETIREMENT PLAN
(THE "401(k) PLAN")
FROM: THE BANK OF NEW YORK, TRUSTEE
RE: INSTRUCTION CONCERNING TENDER OF SHARES ALLOCATED TO YOUR
401(k) ACCOUNT
Dear 401(k) Plan Participant:
Enclosed are materials that require your immediate attention. The materials
describe matters directly affecting your interest in the 401(k) Plan. You may
instruct The Bank of New York, as Trustee (the "Trustee") of the 401(k) Plan
whether to tender shares of Astec Industries, Inc. (the "Company") allocated to
your 401(k) account pursuant to the Offer.
Read all the materials carefully. You will need to complete the enclosed
pink Instruction Form and return it in the postage paid envelope provided. Your
instructions to the Trustee will be confidential.
IN ORDER FOR THE TRUSTEE OF THE 401(k) PLAN TO MAKE A TIMELY TENDER OF YOUR
SHARES, YOU MUST COMPLETE AND RETURN THE ENCLOSED PINK INSTRUCTION FORM IN THE
RETURN ENVELOPE SO THAT IT IS RECEIVED BY THE TRUSTEE'S AGENT NOT LATER THAN
5:00 P.M., NEW YORK CITY TIME ON MONDAY, APRIL 28, 1997 UNLESS EXTENDED. PLEASE
COMPLETE AND RETURN THE PINK INSTRUCTION FORM EVEN IF YOU DECIDE NOT TO
PARTICIPATE IN THE OFFER DESCRIBED BELOW. ONLY THE TRUSTEE MAY TENDER THE SHARES
ALLOCATED TO YOUR ACCOUNT. DO NOT USE THE LETTER OF TRANSMITTAL TO TENDER
SHARES.
The remainder of this letter summarizes the transaction and your options
under the 401(k) Plan, but you also should review carefully the Offer to
Purchase and the Letter of Transmittal included with this letter.
BACKGROUND
Astec Industries, Inc. has made a tender offer (the "Offer") to purchase up
to 2,000,000 shares of its Common Stock, par value $.20 per share (the "Shares"
or the "Common Stock") (including the associated preferred stock purchase rights
(the "Rights") issued pursuant to the Shareholder Protection Rights Agreement,
dated December 22, 1995) at prices not greater than $10.50 nor less than $9.50
per Share. No separate consideration will be paid for the Rights. The enclosed
Offer to Purchase, dated March 27, 1997 (the "Offer to Purchase"), and the
related Letter of Transmittal (which together constitute the "Offer") set forth
the objectives, terms and conditions of the Offer and are being provided to all
of the Company's stockholders.
As a participant in the 401(k) Plan, you are directly affected because the
Company's Offer to Purchase extends to the approximately 53,877.25 Shares
currently held by the 401(k) Plan. Only the Trustee of the 401(k) Plan can
actually tender these Shares for sale. However, as a 401(k) Plan participant,
you may instruct the Trustee whether or not to tender the Shares that are
allocated to your 401(k) account. If you instruct the Trustee to tender these
Shares, you may also specify the price or prices at which they should be
tendered.
The Trustee generally will act pursuant to your instructions. The Trustee
generally will not tender Shares that are allocated to accounts of participants
who fail to complete properly and return timely Instruction Forms. See the
"Trustee's Legal Responsibility" section below for more information.
To assure the confidentiality of your decision, the Trustee has retained
State Street Global Advisors ("State Street") to tabulate the directions of
401(k) Plan participants set forth on the enclosed Instruction
<PAGE> 58
Form. The Plan fiduciary who is responsible for monitoring compliance with these
procedures is the Plan Committee, c/o McKamy Hall, Astec Industries, Inc., 4101
Jerome Avenue, P.O. Box 72787, Chattanooga, Tennessee 37407, telephone (423)
867-4210. You will note from the included envelope that your Instruction Form is
to be returned to State Street.
Proceeds received from a tender of Shares under the terms of the 401(k)
Plan will be allocated to your 401(k) Plan Account and will be invested in
accordance with the provisions of the 401(k) Plan, subject to the Trustee's duty
under the Employee Retirement Income Security Act of 1974 as amended ("ERISA").
See the "Trustee's Legal Responsibility" section below for more information.
HOW YOU INSTRUCT THE TRUSTEE
The details of the Offer are described in the enclosed materials, which you
should review carefully. However, in broad outline, the transaction will work as
follows with respect to 401(k) Plan participants.
- The Company has offered to purchase up to 2,000,000 of its Shares,
constituting approximately 20% of the Company's outstanding shares as of
March 10, 1997.
- If you want any of the Shares allocated to your 401(k) account sold on
the terms and subject to the conditions of the Offer, you need to
instruct the Trustee by completing the enclosed Pink Instruction Form and
returning it to State Street in the return envelope enclosed.
- You need to specify on the Instruction Form the per Share price (in
multiples of $0.125), not greater than $10.50 nor less than $9.50, at
which you wish to tender the Shares allocated to your 401(k) account.
- The Offer and the proration period will expire at 5:00 p.m., New York
City time, on Thursday, May 1, 1997 unless the Company extends the Offer.
ACCORDINGLY, IN ORDER FOR THE TRUSTEE TO MAKE A TIMELY TENDER OF YOUR
SHARES, YOU MUST COMPLETE AND RETURN THE ENCLOSED INSTRUCTION FORM IN THE
RETURN ENVELOPE SO THAT IT IS RECEIVED BY STATE STREET NOT LATER THAN
5:00 P.M., NEW YORK CITY TIME, ON MONDAY, APRIL 28, 1997, UNLESS
EXTENDED. PLEASE COMPLETE AND RETURN THE INSTRUCTION FORM EVEN IF YOU
DECIDE NOT TO PARTICIPATE IN THE OFFER.
- After the deadline above for returning the Instruction Form to State
Street, State Street will complete the tabulation of all instructions and
The Bank of New York, as Trustee, may, subject to applicable provisions
of ERISA, tender the appropriate number of Shares to the Company.
- The Company will then determine the per Share purchase price, (not
greater than $10.50 nor less than $9.50 per Share) (the "Purchase
Price"), at which the Company may purchase up to 2,000,000 Shares.
- Unless the Offer is voided, amended or discontinued in accordance with
its terms, the Company then will buy up to 2,000,000 Shares, that were
tendered at or below the Purchase Price. However, all sellers will
receive the same per Share Purchase Price, even if they tendered below
the Purchase Price.
- If you instruct the Trustee as to the tender of any Shares at a price in
excess of the Purchase Price as finally determined, those Shares will not
be purchased, and they will remain allocated to your 401(k) account. For
more information, see the Offer to Purchase, Section 1 titled "Number of
Shares; Proration."
- Finally, if there is an excess of Shares tendered over the exact number
desired by the Company at the Purchase Price, Shares tendered pursuant to
the Offer may be subject to proration as set forth in Section 1 of the
Offer to Purchase; however, if you own fewer than 100 Shares (including
both Shares held in your 401(k) account and Shares you own otherwise) as
of the Expiration Date (as defined in Section 1 of the Offer to Purchase)
and you tender or instruct the tender of all of your Shares at or below
the Purchase Price, the Company will purchase your Shares before any
proration. This preference is available only if you complete the box
captioned "Odd Lots" on the Instruction Form.
This form of transaction is commonly called a "Dutch Auction." If you do
not want to sell, an option is provided for you to instruct that Shares
allocated to your 401(k) account not be tendered into the Offer.
2
<PAGE> 59
If you desire to revoke or change your instruction to the Trustee in
connection with this Offer, please provide written notice or a new Instruction
Form to State Street not later than 5 p.m., New York City time, on Monday, April
28, 1997. Your notice must include your name, address, Social Security number,
and the number of Shares allocated to your 401(k) account as noted an the
Instruction Form. Upon receipt of your notice or new Instruction Form by State
Street your previous instruction will be deemed canceled. You may instruct the
re-tendering of any Shares in your account by repeating the previous
instructions for directing the tendering set forth in this letter.
INDIVIDUAL PARTICIPANTS IN THE 401(k) PLAN WILL NOT RECEIVE ANY PORTION OF
THE TENDER PROCEEDS FOR SHARES HELD IN THE 401(k) PLAN. ALL SUCH PROCEEDS AND
THE ASSETS WILL REMAIN IN THE 401(k) PLAN AND MAY BE WITHDRAWN ONLY IN
ACCORDANCE WITH THE TERMS OF THE 401(k) PLAN. You should consult your tax
advisor concerning any long term tax consequences that might occur as a result
of tendering Shares held within the 401(k) Plan. If you tender Shares and the
tender is accepted, you will not experience any immediate taxable gain or
losses.
CONFIDENTIALITY
AS MENTIONED ABOVE, THE COMPANY, THE TRUSTEE AND STATE STREET WILL PROTECT
THE CONFIDENTIALITY OF YOUR DECISION AS A 401(k) PLAN PARTICIPANT. UNDER NO
CIRCUMSTANCES WILL YOUR DECISION BE DISCLOSED TO ANY DIRECTORS, OFFICERS, OR
EMPLOYEES OF THE COMPANY EXCEPT TO A LIMITED NUMBER OF ADMINISTRATORS FOR THE
SOLE PURPOSE OF ALLOCATING PROCEEDS TO YOUR 401(k) ACCOUNT IN THE EVENT THAT ALL
OR A PORTION OF YOUR SHARES ARE SOLD.
TRUSTEE'S LEGAL RESPONSIBILITY
If you affirmatively instruct the Trustee concerning your decision to
tender or not tender the Shares allocated to your 401(k) Plan account, the
Trustee will generally follow your instruction. Similarly, if you fail to
affirmatively instruct the Trustee to tender or to not tender the Shares
allocated to your 401(k) account the Trustee generally will treat this as an
instruction not to tender your Shares. However, the Trustee must determine
whether following your instruction or lack of instruction would comply with the
terms of ERISA. Should the Trustee determine that the implementation of a
participant instruction or lack of instruction would not comply with ERISA, it
will ignore such instruction or lack of instruction and exercise its discretion
as Trustee in lieu of such instruction or lack of instruction.
FURTHER INFORMATION
Although the Trustee has no recommendation and cannot advise you whether to
instruct the Trustee to tender or not tender 401(k) Plan Shares, its
representative is prepared to answer any questions that you may have on the
procedures involved in the Dutch Auction and on giving your instruction to the
Trustee.
For additional information, or if you have questions:
- Concerning the procedure to tender 401(k) Plan Shares or for assistance
in completing the Instruction Form
- About the terms and conditions of the Offer
Please contact the information agent for the Offer, ChaseMellon Shareholder
Services, L.L.C., (who is also assisting the Trustee with respect to the 401(k)
Plan Shares), toll free at
1-888-224-2734
Your ability to instruct the Trustee concerning whether or not to tender
Shares allocated to your account is an important part of your rights as an
401(k) Plan participant. Please consider this letter and the enclosed materials
carefully and then return your Instruction Form promptly.
3
<PAGE> 60
PROCEDURE FOR INSTRUCTING TRUSTEE
An Instruction Form for making your direction is enclosed. You must
complete and return the enclosed Instruction Form in the return envelope so that
it is received by State Street Global Advisors ("State Street") not later than
5:00 p.m., New York City time, on Monday, April 28, 1997, unless the Offer is
extended by the Company. PLEASE COMPLETE AND RETURN THE INSTRUCTION FORM EVEN IF
YOU DECIDE NOT TO PARTICIPATE IN THE OFFER. If your Instruction Form is not
received by this deadline, or if it is not fully and properly completed, the
Shares allocated to your 401(k) account will not be tendered by the Trustee
(except as explained under "Trustee's Legal Responsibility" in the Memorandum to
you from the Trustee).
To properly complete your Instruction Form, you must do the following:
(1) On the face of the Instruction Form, check Box 1 or 2. CHECK ONLY ONE
BOX. Make your decision which box to check as follows:
- CHECK BOX 1 if you do not want the Shares allocated to your 401(k)
account tendered for sale at any price and simply want the 401(k) Plan
to continue holding Shares allocated to your account.
- CHECK BOX 2 in all other cases and complete the table immediately
below Box 2, unless you qualify for the Odd Lot preference, in which
case you should disregard the remainder of this instruction (1) and
refer to instruction (2) below. Specify the number of Shares that you
want to tender at each price indicated. Typically, you would elect to
tender Shares at a single price. However, the Instruction Form gives
you the option of splitting your Shares among several prices. You must
state the number of Shares to be sold at each indicated price by
filling in the number of Shares on the line immediately before the
price. Leave a line blank if you want no Shares tendered at that
price. The total number of Shares tendered may not exceed the number
of Shares allocated to your account, but may be less.
(2) If you own fewer than 100 Shares (including both Shares held in your
401(k) account and Shares you own otherwise) as of the Expiration Date
and you tender or instruct the tender of all your Shares, you should
complete the box captioned "Odd Lots" if you wish to receive the Odd Lot
preference. In order to receive this preference, you must check the
first box in the "Odd Lots" box to represent that you qualify for the
Odd Lot preference and you also must either instruct the Trustee to
tender all Shares at one price (by placing an "X" next to the price at
which you wish to tender all of your shares, the available prices being
set forth under "Price" as part of Box 2) or check the second box in the
"Odd Lots" box indicating that you do not wish to specify a purchase
price, in which case all of your Shares will be tendered at the Purchase
Price established by the Company. If you check this second box in the
"Odd Lots" box, DO NOT SPECIFY A PURCHASE PRICE IN THE "PRICE" BOX.
(3) Date and sign the Pink Instruction Form in the space provided.
(4) Finally, return the enclosed Instruction Form in the return envelope so
that it is received by State Street not later than 5:00 p.m., New York
City time, on Monday, April 28, 1997, unless extended. Please complete
and return the Instruction Form even if you decide not to participate in
the Offer.
4
<PAGE> 61
Your instruction will be deemed irrevocable unless withdrawn by 5:00
p.m., New York City time, on Monday, April 28, 1997, unless extended. In
order to make an effective withdrawal, you must submit a notice of
withdrawal of your direction, which must be in writing, or submit a new
Instruction Form in accordance with the previous instructions for
instructing the tendering set forth in this letter, either of which must
be received by State Street at the following address:
State Street Global Advisors
Southpoint Office Center
1700 West 82nd Street, Suite 125
Bloomington, Minnesota 55431-1456
Attn: Ms. Karla Samuelson
5
<PAGE> 62
ASTEC INDUSTRIES, INC.
401(K) PLAN
INSTRUCTION FORM
BEFORE COMPLETING THIS FORM, PLEASE READ CAREFULLY
THE ACCOMPANYING OFFER TO PURCHASE
AND THE RELATED LETTER OF TRANSMITTAL
AND ALL OTHER ENCLOSED MATERIALS
I hereby instruct The Bank of New York, as Trustee of the Astec Industries,
Inc. 401(k) Retirement Plan, as amended and restated on March 1, 1987 and as
amended thereafter (the "401(k) Plan"), to tender to Astec Industries, Inc. (the
"Company"), in accordance with the terms and subject to the conditions set forth
in the Offer to Purchase and the related Letter of Transmittal dated March 27,
1997, a copy of which I have received and read, the indicated number of shares
of the Company's Common Stock, par value $0.20 per share (the "Shares" or the
"Common Stock") (including the associated preferred stock purchase rights issued
pursuant to the Shareholder Protection Rights Agreement, dated as of December
22, 1995, between the Company and the Rights Agent named therein), allocated to
my 401(k) account, or to hold such Shares for my account, in either case as
provided below. (CHECK ONLY ONE BOX):
[ ] 1. Please DO NOT tender. Continue to HOLD all shares allocated to my 401(k)
account.
[ ] 2. Please TENDER Shares allocated to my 401(k) account as indicated below
for each of the prices provided or as provided in the "Odd Lots" box
below. (The total of the Shares may NOT exceed the number of Shares
allocated to your account.) A blank space before a given price will be
taken to mean that no Shares are to be tendered at that price. FILL IN
THE TABLE BELOW ONLY IF YOU HAVE CHECKED BOX NUMBER 2.
================================================================================
<TABLE>
<CAPTION>
PRICE
-------------------
<S> <C>
Number of Shares to be Tendered (The total of all Shares ---- $9.500
must be less than or equal to the number of Shares ---- $10.000
allocated to your account) ---- $9.625
---- $10.125
---- $9.750
---- $10.250
---- $9.875
---- $10.375
---- $10.500
</TABLE>
- --------------------------------------------------------------------------------
Check the box or boxes below only if you qualify for and wish to receive
the Odd Lot preference
<PAGE> 63
ODD LOTS
(SEE INSTRUCTION 8 TO LETTER OF TRANSMITTAL)
[ ] By checking this box, I represent that I own beneficially, as of the
Expiration Date (as defined in Section 1 of the Offer to Purchase), an
aggregate of fewer than 100 Shares (including both Shares held in my 401(k)
account and Shares that I own otherwise), and am tendering or instructing
the applicable record holder(s) (in the case of Shares held in the 401(k)
account, the Trustee) to tender all such Shares.
INDICATE IN THE "PRICE" BOX ABOVE THE PRICE AT WHICH YOU WISH TO TENDER
100% OF THE SHARES IN YOUR ACCOUNT OR CHECK THE BOX BELOW TO TENDER AT THE
PURCHASE PRICE ESTABLISHED BY THE COMPANY. [ ]
INSTRUCTIONS
Carefully complete the front side of this Instruction Form. Then insert
today's date and sign and print your name in the spaces provided immediately
below. Enclose the Instruction Form in the included postage prepaid envelope and
mail it promptly. YOUR INSTRUCTION FORM MUST BE RECEIVED BY STATE STREET GLOBAL
ADVISORS NOT LATER THAN 5:00 P.M., NEW YORK CITY TIME, ON APRIL 28, 1997, UNLESS
EXTENDED.
PLEASE COMPLETE AND RETURN THE INSTRUCTION FORM EVEN IF YOU DECIDE NOT TO
PARTICIPATE IN THE OFFER. Instruction Forms that are not fully and properly
completed, dated, and signed, or that are received after the deadline, will be
ignored, and the Shares allocated to your account will not be tendered unless
otherwise required by law. Note that the Trustee must also ignore any
instruction that it determines cannot be implemented without violation of the
law.
Date:
--------------------------------------
------------------- , 1997 Your signature (Please sign your name
as it appears below)
--------------------------------------
(Please print your name)
2
<PAGE> 64
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<S> <S> <C>
- ------------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
8. Sole proprietorship account The Owner(4)
- ------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
9. A valid trust, estate, or pension Legal entity (Do
trust not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 65
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt, charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to non-resident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041(a),
6045, and 6050A.
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. -- If you fail to
include any portion of an includable payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE> 66
ASTEC INDUSTRIES, INC. ANNOUNCES "DUTCH AUCTION"
SELF-TENDER OFFER FOR UP TO 2,000,000 SHARES
---------------------
CHATTANOOGA, TENNESSEE, MARCH 27, 1997. Astec Industries, Inc. (NASDAQ:
ASTE) announced today that its Board of Directors has authorized a "Dutch
Auction" self-tender offer for up to 2,000,000 shares of the Company's Common
Stock. The tender price range will be from $9.50 up to $10.50 per share. The
offer will commence on Thursday, March 27, 1997, and expire at 5:00 p.m., New
York City time on Thursday, May 1, 1997, unless otherwise extended.
The Company indicated that if it were to purchase 2,000,000 shares pursuant
to the offer at a purchase price of $10.50 per share (the highest price in the
range of possible purchase prices), the maximum aggregate cost of the offer,
including expenses, would be approximately $21.45 million. In order to finance
the repurchase of the stock, the Company has a written commitment from its bank,
The First National Bank of Chicago, to amend and restate its existing credit
facility to allow for additional borrowing of up to $22 million, if necessary.
Under the terms of the Dutch Auction offer, Astec stockholders will be
given the opportunity to specify prices within the Company's stated price range
at which they are willing to tender their shares. Upon receipt of the tenders,
Astec will determine a single per share price that will enable it to purchase up
to the stated amount of shares from those stockholders who agreed to sell at or
below the Company-selected purchase price. If more than 2,000,000 shares are
tendered at or below the purchase price, there will be a proration. The offer
will be subject to other various terms and conditions, which are described more
fully in the Offer to Purchase and Letter of Transmittal, which will be
distributed to stockholders this week.
On Wednesday, March 26, 1997, the last full trading day on the NASDAQ
National Market prior to the announcement and commencement of the tender offer,
the closing sale price per share was $8.875. As of March 10, 1997, the Company
had 10,044,199 shares of Common Stock issued and outstanding.
"We believe that the purchase of Astec shares is consistent with our
long-term goal of increasing shareholder value and that our stock is an
attractive investment at this time," said Dr. J. Don Brock, Chairman of the
Board and President of Astec.
None of the Company's executive officers and board members plan to sell any
shares pursuant to the offer.
Participants in the offer will avoid the transaction costs typically
associated with market sales. Astec is making no recommendation to its
stockholders regarding their participation in this tender offer. ChaseMellon
Shareholder Services, L.L.C. will be the Depositary for the offer and will also
serve as the Information Agent. Inquiries and comments should be directed to
Astec in care of ChaseMellon Shareholder Services, L.L.C. at (888) 224-2734,
which is a toll-free number.
Astec Industries, Inc. designs, engineers, manufactures and markets
equipment and components used primarily in road building and related
construction activities. The Company's principal road building products include:
hot mix asphalt plants; material transfer vehicles and asphalt paving equipment;
rock crushing plants and aggregate processing equipment; asphalt heaters; and
equipment used in moving and recycling asphalt and concrete from old roads and
other surfaces. The Company also manufactures trenching and excavating
equipment; environmental remediation equipment and other industrial
heat-transfer equipment. The Company's products are used in each phase of the
road building process from quarrying and crushing the aggregate to application
of the road surface.
<PAGE> 67
[LETTERHEAD - FIRST CHICAGO BANK]
March 25, 1997
Astec Industries, Inc.
4101 Jerome Avenue
Chattanooga, Tennessee 37407
Attention: McKamy Hall
Re: Commitment Letter
Dear McKamy:
Astec Industries, Inc., a Tennessee corporation (the "Borrower"), has
requested an amendment and restatement of the Credit Agreement between the
Borrower and The First National Bank of Chicago ("First Chicago"), dated as of
July 20, 1994, as amended, to increase the revolving credit facility (the
"Facility") by up to $30,000,000 over the existing total credit of $22,000,000
(the "Credit Increase"), for a total revolving credit commitment of up to
$52,000,000 (the "Aggregate Commitment"). The Credit Increase would be
available, if necessary, to fund a repurchase of up to $22,000,000 of stock of
the Borrower (the "Stock Repurchase") and it would include the letter of credit
previously issued by First Chicago in favor of Trencor, Inc., a subsidiary of
the Borrower, pursuant to a Letter of Credit Agreement dated as of April 1,
1994 (which would be considered usage under the Aggregate Commitment), in
addition to funding working capital needs.
First Chicago is pleased to offer to act as administrative agent (the
"Agent") under the Facility and to commit to make loans to the Borrower up to
the amount of the Aggregate Commitment on the terms and subject to the
conditions set forth herein and in the term sheet attached hereto (the "Term
Sheet").
The Agent intends, and reserves the right, to syndicate the Facility to
a group of lenders (collectively, including the Agent, the "Lenders") selected
by First Chicago Capital Markets, Inc. ("FCCM"), and acceptable to the
Borrower, which acceptance will not be unreasonably withheld. FCCM will act as
arranger (the "Arranger") and will manage all aspects of the syndication
including, without limitation, the timing of all offers to potential lenders,
the acceptance of commitments and the amounts accepted. Without limiting the
foregoing, upon the Arranger's acceptance of any such commitment from a Lender,
and upon execution of an assignment agreement or the Credit Agreement (as
hereafter defined) by such Lender, the Agent shall be relieved of its
commitment to fund such amount. The Borrower agrees to participate actively in
the preparation of an information package regarding the operations and
prospects of the Borrower and the presentation of the information to
prospective lenders.
The obligation of the Agent to make loans under the Facility is subject
to the following: (i) the preparation, execution and delivery of an amended and
restated credit agreement ("Credit Agreement") and other loan documents
(collectively, together with the Credit Agreement, the "Loan Documents")
mutually acceptable to the Borrower and the Lenders incorporating, without
limitation, substantially the terms and conditions outlined herein and in the
Term Sheet; and (ii) the Agent's determination that there is no material
adverse change in the business, condition (financial or otherwise), operations,
performance, properties, or prospects of the Borrower or any of its material
subsidiaries since December 31, 1996.
<PAGE> 68
The Borrower hereby agrees to reimburse the Agent and the Arranger for
all out-of-pocket expenses (including the reasonable fees, time charges and
expenses of attorneys for the Agent and the Arranger in an amount not to exceed
$25,000, which attorneys may be employees of the Agent or the Arranger)
incurred in connection with the preparation, negotiation, execution,
syndication and enforcement of this commitment letter, the fee letter of even
date herewith between the Borrower, the Agent and the Arranger (the "Fee
Letter"), the Loan Documents and any other documentation contemplated hereby or
thereby.
The Borrower hereby further agrees to indemnify and hold harmless the
Agent, the Arranger, the Lenders and their respective officers, employees,
agents and directors (each an "indemnified party") against any and all losses,
claims, damages, costs, expenses (including the reasonable fees, time charges
and expenses of attorneys for the indemnified parties, which attorneys may be
employees of the indemnified parties) or liabilities of every kind whatsoever
(collectively, the "Indemnified Obligations") to which each of the indemnified
parties may become subject in connection in any way with the transaction which
is the subject of this commitment letter, including, without limitation,
expenses incurred in connection with investigating or defending against any
liability or action (whether or not such indemnified party is a party thereto).
The Borrower's obligations under the immediately preceding two
paragraphs shall continue and are and shall remain absolute obligations of
the Borrower, unless and until superseded by the indemnity provisions of
definitive Loan Documents, whether or not Loan Documents are executed or any
loan is made by the Agent or any conditions of lending are met. The obligations
of the Agent and the Arranger under this commitment letter shall be enforceable
solely by the Borrower and may not be relied upon by any other person. Neither
the Agent nor the Arranger shall be liable under this commitment letter or any
Loan Document or in respect of any act, omission or event relating to the
transaction contemplated hereby or thereby, on any theory of liability, for any
special, indirect, consequential or punitive damages.
This commitment letter, the Fee Letter and the Term Sheet are for the
Borrower's confidential use only and may not be disclosed by it to any person
other than its shareholders, directors, employees, attorneys and financial
advisors (but not commercial lenders), and then only in connection with the
proposed transaction, except where (in the Borrower's judgment) disclosure is
required by law or where the Agent or the Arranger consents to the proposed
disclosure, which consent shall not be unreasonably withheld. Officers,
directors, employees and agents of each of the Arranger and the Agent shall at
all times have the right to share information received from the Borrower and
its affiliates and their respective officers, directors, employees and agents.
Please indicate the Borrower's acceptance of the commitment herein
contained in the space indicated below and return a copy of this commitment
letter so executed to the Arranger. The Borrower agrees to pay the Agent and
the Arranger the fees described in the Fee Letter at the times and under the
circumstances described therein. This commitment will expire at 5 p.m. (Chicago
time) on March 31, 1997, unless on or prior to such time the Arranger shall
have received a copy of this commitment letter executed by the Borrower.
Notwithstanding timely acceptance of this commitment letter pursuant to the
preceding sentence, the commitment herein contained will automatically terminate
unless definitive Loan Documents are executed on or before May 15, 1997.
This commitment letter, the Fee Letter and the Term Sheet supersede any
and all prior versions hereof or thereof. This commitment letter may only be
amended by a writing signed by all parties thereto. The parties acknowledge that
the Borrower's request for the Credit Increase is contingent upon the extent to
which, if any, the Borrower proceeds with the Stock Repurchase. If the
Borrower does not proceed with the Stock Repurchase or if the Borrower's cash
position makes it unnecessary to borrow funds in connection with the Stock
Repurchase, then the Borrower shall be under no obligation to close on the
Page 2
<PAGE> 69
Facility in which case the Borrower shall have no obligation to the Agent,
Arranger or Lenders for the Arrangement Fee or the Annual Agency Fee described
in the Fee Letter. Notwithstanding the foregoing, the Borrower shall be
obligated to pay all other out-of-pocket costs and expenses described above,
including attorneys' fees and expenses, whether or not the Facility closes.
IF THIS COMMITMENT LETTER, THE TERM SHEET, THE FEE LETTER OR ANY ACT,
OMISSION OR EVENT HEREUNDER OR THEREUNDER BECOMES THE SUBJECT OF A DISPUTE, THE
BORROWER, THE AGENT AND THE ARRANGER EACH HEREBY WAIVE TRIAL BY JURY. THIS
COMMITMENT LETTER SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
Sincerely,
THE FIRST NATIONAL BANK OF
CHICAGO, individually and as Agent
By: /s/ DAVID J. MCNEELA
------------------------------
Title: Authorized Agent
FIRST CHICAGO CAPITAL MARKETS,
INC. as Arranger
By: /s/ DAVID J. MCNEELA
------------------------------
Title: Vice President
ACCEPTED AND AGREED TO:
ASTEC INDUSTRIES, INC.
BY: /s/ Richard W. Bethea, Jr.
- ------------------------------
Title: Vice President
and Counsel
Date: March 25, 1997
Page 3
<PAGE> 70
TERM SHEET
ASTEC INDUSTRIES, INC.
March 25, 1997
This Term Sheet is delivered with a commitment letter of even date
herewith (the "Commitment Letter") from The First National Bank of Chicago
("First Chicago") and First Chicago Capital Markets, Inc. ("FCCM") to the
Company (as hereafter defined). Capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to such terms in
the Commitment Letter.
GENERAL TERMS
Borrower: Astec Industries, Inc., a Tennessee corporation (the "Company").
Guarantors: All subsidiaries of the Company including all guarantors under
the Existing Credit Agreement (as hereafter defined).
Transaction: The Company proposes to amend and restate the Existing Credit
Agreement to allow additional borrowings for the Stock
Repurchase (as hereafter defined) if necessary and for general
working capital.
Aggregate Up to $52,000,000 comprised of revolving credit loans (with
Amount: letter of credit and swingline sublimits) as described below.
Administrative First Chicago (the "Agent").
Agent:
Arranger: FCCM (the "Arranger").
Lenders: A group of lenders selected by the Arranger (collectively,
together with the Agent in its capacity as lender, the
"Lenders").
Syndication The Arranger will, in consultation with the Company, manage
Management: all aspects of the syndication including, without limitation,
the timing of offers to potential Lenders, the amounts offered
to potential Lenders, the acceptance of commitments, and the
compensation provided. Without limiting the foregoing, upon
the Arranger's acceptance of any such commitment from a Lender,
and execution of an assignment agreement or the Credit
Agreement
<PAGE> 71
(as hereafter defined) by such Lender, the Agent shall be
relieved of its commitment to fund such amount.
Allocation: The Arranger shall, in its sole discretion, allocate the
Ratable Share: commitments received from the Lenders. The Lenders will
share ratably in the facility based on the commitment
allocation.
THE FACILITY
Type: Five year reducing revolving credit facility.
Amount: Up to $52,000,000 (the "Commitment").
Swingline: A $5,000,000 swingline sublimit against the Commitment to
provide short term working capital needs, priced at ABR plus
the Applicable Margin (as such terms are hereafter defined).
Purpose: To finance the repurchase of up to $22,000,000 of the
Company's stock ("Stock Repurchase") under an amendment
and restatement of the Credit Agreement between the Company
and First Chicago dated as of July 20, 1994, as amended
("Existing Credit Agreement"), and for working capital
purposes.
Maturity: Final maturity shall be 5 years from the closing date.
Annual Outstanding principal balance of loans shall be reduced for
Cleandown: 30 consecutive days during each 12 month period during the
term of the Commitment to an amount not to exceed the
following amounts:
Amount Period
$10,000,000 plus 100% of Stock Repurchase 6/1/97 - 5/31/99
$10,000,000 plus 66 2/3% of Stock Repurchase 6/1/99 - 5/31/00
$10,000,000 plus 33 1/3% of Stock Repurchase 6/1/00 - 5/31/01
$75,500,000 6/1/01 - 5/31/02
Commitment The Commitment shall be permanently reduced by the following
Reductions: amounts on the following dates:
Page 2
<PAGE> 72
Reduction Amount Reduction Date
33-1/3% of Stock Repurchase July 15, 1999
33-1/3% of Stock Repurchase July 15, 2000
33-1/3% of Stock Repurchase July 15, 2001
Letters of Credit: A $15,000,000 sublimit for standby and direct pay letters
of credit ("Letter of Credit"), subject to availability
under the Commitment. No Letter of Credit shall be issued
with an expiration date which exceeds the maturity date
or is more than one year after the date of its issuance.
Outstanding Letters of Credit will constitute usage under
the Commitment. Immediately upon the issuance of each
Letter of Credit, each Lender shall be deemed to have
automatically and unconditionally purchased and received
from the Agent an undivided interest and participation in
and to such Letter of Credit, the obligations of the
Company in respect thereof, and the liability of the
Agent thereunder, in an amount equal to the face amount
of such Letter of Credit multiplied by such Lender's
percentage of the Commitment. The existing letter of
credit issued by First Chicago in favor of Trencor, Inc.,
a subsidiary of the Company, pursuant to a Letter of
Credit Agreement dated as of April 1, 1994, shall
constitute usage under the Commitment and be deemed a
Letter of Credit under this letter of Credit subfacility.
INTEREST RATES
At the Company's Option:
ABR or Eurodollar Rate plus Applicable Margin determined on the basis of
the following grid:
Page 3
<PAGE> 73
<TABLE>
<CAPTION>
Applicable Margin
for Eurodollar Applicable
Debt/EBITDA Rate Margin for ABR
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<S> <C> <C>
at or below 1.5 75 basis points -25 basis points
above 1.5 but at or below 2.0 100 -25
above 2.0 but at or below 2.5 125 -25
above 2.5 but at or below 3.0 150 0
above 3.0 but at or below 3.5* 175 25
above 3.5* 200 50
</TABLE>
The Applicable Margin shall be adjusted (upward or downward)
effective ten days after the Agent has received the Company's
quarterly financial statements required to be delivered under
the Credit Agreement. "Debt/EBITDA" shall mean the "Debt/EBITDA
Ratio" described in "Covenants" below.
GENERAL Eurodollar Rate interest periods shall be one, two, three or six
PROVISIONS months. Interest on ABR loans shall be payable on the 1st day
RELATING TO each quarter and upon any prepayment (whether due to
INTEREST RATES: acceleration or otherwise) and at final maturity. Interest or
Eurodollar Rate loans shall be payable in arrears on the last
day of each interest period and, in the case of an interest
period longer than three months, quarterly, upon any prepayment
(whether due to acceleration or otherwise) and at final
maturity. Interest on all loans and fees shall be calculated for
actual days elapsed on the basis of a 360-day year. The Credit
Agreement will include customary provisions relating to funding
indemnification, yield protection, availability, illegality and
capital adequacy. After default, the interest rate will be equal
to ABR plus the Applicable Margin, if any, plus 2% per annum.
DEFINITIONS The following terms shall have the meanings set forth below:
RELATING TO
INTEREST RATES:
"ABR" means a fluctuating rate of interest equal to the higher
of (a) CBR and (b) the Federal Funds Effective Rate most
recently determined by the Agent plus 1/2% per annum.
- ---------------
*During those periods when such levels are permissible
under the "Debt/EBITDA Ratio" covenant.
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"CBR" means the corporate base rate of interest announced
by the Agent from time to time, changing when and as said
corporate base rate changes.
"Eurodollar Rate" means the rate at which the Agent
offers to place deposits in U.S. dollars with first-class
banks in the London interbank market at 11:00 a.m.
(London time) two business days prior to the borrowing
date in the approximate amount of, and for a maturity
corresponding to, the Agent's (in its capacity as a
Lender) portion of the loan, adjusted for Federal Reserve
Board reserve requirements.
"Federal Funds Effective Rate" means, for any period, a
fluctuating rate of interest equal for each day during
such period to (a) the weighted average of the rates on
overnight Federal Funds transaction with members of the
Federal Reserve System arranged by Federal Funds brokers,
as published for such day by the Federal Reserve Bank of
New York or (b) if such rate is not so published for any
day the average of the quotations for such day on such
transactions received by the Agent from three Federal
Funds brokers of recognized standing selected by it:
FEES
The Company will pay the following fees:
COMMITMENT FEE: A commitment fee will be payable on the undrawn/unused
part of the Commitment quarterly in arrears to the
Agent for the ratable benefit of the Lenders from the
closing date until termination of the Commitment based
upon the following grid:
Debt/EBITDA Commitment Fee
----------- --------------
at or below 2.5 25 basis points
above 2.5 but at or below 3.5 37.5
above 3.5 50
For the purpose of computing the commitment fee,
swingline loans will not be considered usage.
LETTER OF A fee equal to the Applicable Margin for the Eurodollar
CREDIT FEES: Rate will be payable on the face amount of each Letter of
Credit quarterly in arrears to the Agent for the ratable
benefit of the Lenders. Fronting fees and issuing fees,
if any, will be payable as agreed to between the Company
and the Agent.
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AGENT AND Such fees payable to the Arranger and Agent as are specified
OTHER FEES: in the fee letter between the Agent and the Borrower.
PREPAYMENTS AND COMMITMENT REDUCTIONS
MANDATORY The following mandatory commitment reductions shall be made:
REDUCTIONS:
SALE OF ASSETS: Upon the sale, transfer or other disposition
of any material asset of the Company or any of its subsidiaries
(other than the sale of inventory in the ordinary course of
business) which is permitted by the terms of the Loan
Documents, the Company shall make a mandatory reduction of the
Commitment in an amount equal to 100% of the net proceeds
realized from such sale, transfer or other disposition.
SALE OF STOCK/DEBT: Upon the sale of any common stock,
preferred stock, warrant or other equity, or upon the receipt
of proceeds from the issuance of any indebtedness, the Company
shall make a mandatory reduction of the Commitment in an amount
equal to (i) 50% with respect to equity, and (ii) 100% with
respect to debt, of the net proceeds so realized or so received
from such sale or issuance.
VOLUNTARY The Commitment may be permanently reduced by the Company in
COMMITMENT multiples of $100,000 upon one business days' prior written
REDUCTIONS: notice.
VOLUNTARY Loans bearing interest based on the ABR may be prepaid at any
PREPAYMENTS: time without penalty on one business days' prior written notice
in a minimum amount of $100,000. The Company shall compensate
the Lenders for any funding losses and loss of profits incurred
as a result of any prepayment of a loan bearing interest based
on the Eurodollar Rate prior to the last day of the applicable
interest period. If the Company borrows at the Eurodollar Rate
prior to the completion of the syndication (which shall not
extend beyond six months from the closing), the Company shall
be responsible for any funding losses and lost profits
resulting from Lenders purchasing interests in loans
outstanding under the Commitment prior to the end of an
interest period.
CONDITIONS TO LENDING
The Commitment shall be evidenced by a credit agreement ("Credit
Agreement") and other documents ("Loan Documents") in form and substance
acceptable to the Lenders. The Credit
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Agreement shall include, without limitation, conditions precedent,
representations and warranties, covenants, events of default, indemnification
(of Agent, Arranger and Lenders) and other provisions customary for such
financings.
CONDITIONS PRECEDENT
Customary conditions to each loan (including in addition to conditions
similar to the Existing Credit Agreement, absence of default or unmatured
default, absence of material litigation and lack of material adverse change
from the Company's financial condition and operations as reflected on the
Company's consolidated financial statements as of December 31, 1996 previously
delivered to Agent). Additional conditions precedent to initial loan will
include, without limitation:
INITIAL FUNDING: Initial funding shall occur no later than May 20, 1997.
LEGAL MATTERS: All legal (including tax implications) and regulatory matters
shall be satisfactory to the Agent.
REGULATIONS: Compliance with all applicable requirements of Regulations U,
G, T and X of the Board of Governors of the Federal Reserve
System.
STOCK The Stock Repurchase documentation shall have been delivered
REPURCHASE: to the Agent.
NO Default; No default or unmatured default shall exist on the funding
NO MAC: date and no material adverse change in the business,
condition (financial or otherwise), operations, performance,
properties or prospects of the Company or any obligor or
guarantor since December 31, 1996, shall have occurred.
SOLVENCY Certificate from the Chief Accounting Officer certifying that
CERTIFICATE: the Company will be solvent following the Stock Repurchase.
CUSTOMARY Receipt of other customary closing documentation including
DOCUMENTS: without limitation, legal opinions of the Company's counsel
reasonably acceptable to the Agent.
REPRESENTATIONS AND WARRANTIES
The Credit Agreement will contain representations and warranties similar
to the Existing Credit Agreement and additional customary representations and
warranties, including, without limitation, absence of material adverse change,
absence of material litigation, absence of default
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or unmatured default, continued accuracy of representations regarding
environmental issues, compliance with all material requirements of laws and
contracts and compliance with regulations U, G, T and X.
COVENANTS
The Credit Agreement will contain covenants similar to the Existing Credit
Agreement and additional customary negative, affirmative and financial
covenants, including, without limitation, financial reporting, maintenance of
property and insurance, payment of taxes, sale of assets, restriction on liens,
restricted payments, sale and leaseback transactions, consolidations and
mergers, restrictions on investments, restrictions on guaranties (except those
permitted in connection with the Existing Credit Agreement) and indebtedness,
ERISA matters and transactions with affiliates. The Credit Agreement will
contain a covenant providing that the covenants of any future financing
transaction permitted by the Credit Agreement involving any subsidiary of the
Company will be no more favorable to the lenders thereunder than the covenants
in the Credit Agreement. The Credit Agreement will also contain the following
financial covenants:
Investments in Limitation on additional equity investments in Astec
Astec Financial: Financial to $5,000,000.
Minimum Tangible The Company will maintain a minimum Consolidated
Net Worth: Tangible Net Worth of not less than $90,000,000, less
the amount of the Stock Repurchase, plus fifty percent
(50%) of Cumulative Consolidated Net Income subsequent
to December 31, 1996, plus the amount of proceeds from
any stock issuance, at all times.
Interest The Company will not, as at the last day of any fiscal
Coverage Ratio: quarter, permit the ratio of (i) net income (excluding
unusual gains or losses), PLUS income tax expense PLUS
interest expense, to (ii) interest expense, in each
case for the preceding four (4) fiscal quarters
(including the quarter in which the determination date
falls), to be less than 2.50 to 1.0.
Debt to The Company will not, as of the last day of any fiscal
EBITDA Ratio: quarter during the following periods, permit the ratio
of (i) its Consolidated Funded Debt to (ii) its
EBITDA, in the trailing four (4) fiscal quarters
(including the quarter in which the determination date
falls), to be greater than the following amounts:
DEBT/EBITDA PERIOD
----------- ------
4.0:1.0 4/1/97 - 6/30/99
3.5:1.0 7/1/99 - 6/30/00
3.0:1.0 7/1/00 and thereafter
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Capitalized terms defined above shall have substantially the same
meanings as set forth in the Existing Credit Agreement. "EBITDA" shall mean the
sum of net income plus income tax expense, minus equity in net income of
affiliates, plus interest expense, plus depreciation expense, plus other
non-cash charges, minus interest income.
DEFAULTS
Customary events of default, including, without limitation, cross
default to occurrence of a default (whether or not resulting in acceleration)
under any other agreement governing indebtedness of the Company or any of its
subsidiaries, and change in control.
WAIVERS AND AMENDMENTS
Amendments and waivers will require approval from Lenders representing
67% or more of the Commitment, except: (i) increases in commitment amounts,
(ii) reductions of principal, interest, or fees, (iii) extensions of scheduled
maturities or times for payment, and (iv) release of guarantors, in which the
consent of all Lenders will be required.
ASSIGNMENTS AND PARTICIPATIONS
Each Lender may, in its sole discretion, sell participations and may,
in a manner acceptable to Agent, sell assignments in the loans and in its
commitment and disclose information to prospective participants and assignees,
and share, at its option, any fees with such participants and assignees. The
assignor shall pay an assignment fee (each an "Assignment Fee") of $3,500 to
Agent upon any assignment by a Lender of its rights and obligations under the
Credit Facilities (including, without limitation, an assignment by a Lender to
another Lender).
MISCELLANEOUS
GOVERNING LAW: The Commitment Letter, the fee letter and this Term Sheet are
governed by the internal laws of the State of Illinois.
EXPENSES: The expenses of the Agent and the Arranger, whether incurred
prior to or subsequent to closing, in investigation,
preparation, negotiation, documentation, syndication,
administration and collection will be for the account of the
Company, including expenses of and fees for attorneys for the
Agent and the Arranger (who may or may not be employees of the
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Agent or the Arranger) and other advisors and professionals engaged by
the Agent or the Arranger.
* * *
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This Term Sheet is intended as an outline only and does not purport to
summarize all the conditions, covenants, representations, warranties and other
provisions which would be contained in definitive legal documentation for the
financing contemplated hereby. The commitment of the Agent and the other
Lenders is subject to negotiation and execution of definitive Loan Documents
in form and substance satisfactory to the Lenders and their respective counsel.
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